20210111Suez to Staff 87-110.pdf

Michael C. Creamer (lSB No. 4030)
Preston N. Carter (lSB No. 8402)
Givens Pursley LLP
601 W. Bannock St.
Boise, lD 83702
Telephone: [phone]
Facsimile: (208) 388-1 300
m cc@qivenspu rslev. com
presto n ca rte r@q iven sp u rslev. co m
Attorneys for SUEZ Water ldaho lnc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION
OF SUEZ WATER IDAHO INC. FOR
AUTHORIry TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE
IN THE STATE OF IDAHO
Case No. SUZ-W-20-02
SUEZ WATER IDAHO INC.'SRESPONSE TO FIFTH
PRODUCTION REQUEST OF THE
COMMISSION STAFF
suEz water ldaho lnc., ("sUEZWater" or "company,') submits the folowing
responses to the Fifth Production Request of the Commission Staff to SUEZ Water,
dated December 17,2020. Please note that the responses to Requests Nos. g6, g7,
100 and 103 are confidential and will be submitted under separate cover per the
Commission's rules.
DATED: January 11,2021
SUEZ WATER IDAHO INC.
I/ ry.2*Z*^
By:
Michael C. Creamer
Preston N. Carter
Attorneys for A p p I i ca nt
SUEZWATER'S RESPONSE TO FIFTH PRODUCTION REQUEST
OF THE COMMISSION STAFF.l
'r 5474363_1 .DOCX [30-2091
CERTIFICATE OF SERVICE
I certify that on January 11,2021, a true and correct copy of the foregoing wasserved upon all parties of record in this proceeding via electronic mail as indicated
below:
Commission Staff
Jan Noriyuki, Commission Secretary Electronic Mail
ldaho Public Utilities Commission
1 1331 W. Chinden Blvd., Bldg. 8, Ste. 201-A
Boise, lD 83714
ian.norivrrkitO ouc.idaho.oov
Dayn Hardie
Matt Hunter
Deputy Aftomey General
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Ste. 201-A
Boise, lD 83714
Electronic Mail
Electronic Mail
Boise City: - Non-Confidential
Responses Only
Abigail R. Germaine
Deputy City Attorney
Boise City Attorney's Office
150 N. Capitol Blvd.
P.O. Box 500
Boise, lD 83701-0500
a qerm a i ne@ cityofbo i se. oro
Suez Water Customer Group:
Norman M. Semanko
Parsons Behle & Latimer
800 W. Main Street, Suite 1300
Boise, lD 83702
NSema nko@ pa rsonsbehle. com
Boisedocket@pa rsonsbehle. com
ldaho Fair House Council, lnc.
Ken Nagy
Aftorney at Law
P.O. Box 164
Lewiston, lD 83501
[e-mail]
davn harcli ouc.idaho,oov
matt.hu c.idaho.oov
lntervening Parties
Ada County:
Lorna K. Jorgensen
John C. Cortabitarte
Ada County Prosecuting Attorney's Office
Civil Division
200 W. Front Street, Room 3191
Boise, lD 83702
civilpafiles@adaweb. net
CAPAI: - Non-Confidential Responses Only
Brad M. Purdy
2019 N. 17th Street
Boise, lD 83702
[e-mail]
I nteruenors: - Non-Confidential Responses
Only
Marty Durand
Piotwrowski Durand PLLC
1020 Main Street, Suite 440
P.O. Box 2864
Boise, lD 83701
[e-mail]
SUEZ WATER'S RESPONSE TO FIFTH PRODUCTION REQUEST
OF THE COMMISSION STAFF.2
1 5474363_1.DOCX [30-209]
Micron Technology, lnc.
Austin Rueschhoff
Thorvald A. Nelson
Holland & Hart
555 17th St., Suite 3200
da ru esch h off@ ho I la nd hart. com
Jim Swier
Greg Harwood
Micron Technology, Inc.
8000 S. FederalWay
[e-mail]
obhanvood n.comtnelsontOhoandhart.com
aclee@holla nd ha rt.com
q lqa roa noa ma ri @ hol la nd ha rt. com
Preston N. Carter
SUEZ WATER'S RESPONSE TO FIFTH PRODUCTION REQUEST
OF THE COMMISSION STAFF.3
1 s474363_1.DOCX [30-209]
SUZ-W-20-02
IPUC DR 87 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary

REQUEST NO. 87:
Please explain the increase in the Field Contractors CE 641015 account for the test
year expense compared to years 2017 through 201 9 provided on Page No. 14 of
Exhibit No. 10, Schedule 1. In the explanation, please identify the specific changes
resulting in the increase compared to those three years.
RESPONSE NO. 87:
The increase in field contractor expense for test year ending June 2020 of $191,174
compared to years 2017 through 2019 ($121,066, $147,824 and $157,569 respectively)
is driven predominantly by three items described below.

The test year includes Advanced Diving Service for reservoir inspections totaling $45,123
to address necessary maintenance and inspection of the Company’s water reservoirs
based on a 5-year cycle. These water storage reservoirs are utilized throughout the
system to supply water during peak demand time and for fire flow requirements. The size
and construction of the tank affects the cost of inspection and may include potential
repairs. The interior & exterior tank painting costs and major repair costs are not captured
here but are deferred. For comparison the inspections costs during 2017 through 2019
were $16,538. While the costs incurred during the test year are higher compared to the
prior three years, this is the level of cost the company anticipates to incur for
comprehensive tank inspections going forward.

Northwest Power Systems generator maintenance for the test year totaled $66,884. For
comparison in 2017 the cost was $44,261. As the number of power backup generators
required in the system increases, so do associated maintenance costs.

SUZ-W-20-02
IPUC DR 87 Page 2 of 2
The Concur system implementation for the administration of company purchasing cards
and expense reports in early 2019 necessitated an accounting change due to available
chart fields. Costs for routine maintenance such as HVAC service, filters and minor repair
services paid for through the use of an assigned purchasing card were previously coded
to account 50655. These expenses are now captured in account 50400 subcontractor
costs and the test year expense of $20,279 is not comparable with history for this account.

SUZ-W-20-02
IPUC DR 88 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary

REQUEST NO. 88:
Please provide additional details of the requirement change for Synthetic Organic
Chemical (SOC) monitoring mentioned on Page Nos. 10-11 of Witness Cary's direct
testimony. In the response, please include:
a. A description of SOC monitoring and why it is required
b. The reason why the change in requirements has occurred; and
c. An itemization of the $20,000 cost required for SOC monitoring. RESPONSE NO. 88:

a. Synthetic organic compounds are a class of man-made contaminants that may be
present in ground and surface water. Collectively, this group includes herbicides,
pesticides, and other chemicals that come from agriculture, urban storm water
runoff, or industrial activities. SOCs may cause injury to lungs, liver, or kidneys,
reproductive difficulties, genetic mutation or fetal deformity, or cancer. Chemical
Monitoring Requirements of SOCs: Monitoring frequency is based on population
served. Water systems serving ≤ 3,300 persons are required to sample once every
3 years while systems serving > 3,300 persons are required to sample every
source twice in one year during each 3 year compliance period (in 2 different
quarters).

b. In past years, SUEZ has been granted monitoring waivers for a majority of its
sources that had demonstrated a low vulnerability to contamination. According to
the Idaho Department of Environmental Quality (ID DEQ), the monitoring waiver
process changed in 2020. There are new protocols that ID DEQ is being required
to go through when granting a waiver for any system. According to DEQ, it will now
be much more difficult for systems to receive monitoring waivers.
SUZ-W-20-02
IPUC DR 88
Page 1 of 2
Background information: Monitoring waivers are reductions in the repeat
monitoring frequency for certain inorganic and organic chemical contaminants.
Monitoring waivers are allowed by federal rules and each state has the option to
allow them or not. Idaho adopted rules to allow monitoring waivers because of the
low occurrence of contamination in public water systems and to help systems,
particularly small systems, save money. Monitoring applications are based on
federal requirements and are designed to determine levels of contamination and
the vulnerability of the system to contamination.

c. Each SOC test costs approximately $1,200. Based on the lower likelihood of being
granted reduced monitoring waivers for SOC testing, every source of supply in the
SUEZ system will be required to monitor for SOCs twice a year, in each 3-year
monitoring cycle. In 2020, SOC monitoring totaled $32,000. In 2021, SOC
monitoring is expected to total $52,000.
SUZ-W-20-02
IPUC DR 89 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary

REQUEST NO. 89:
Please provide additional details of the "Notify" customer notification system mentioned
on Page No. 12 of Witness Cary's direct testimony. In the response, please include:

a. An itemization of the annual costs required for the "Notify" system, and
b. An explanation why the system is required.

RESPONSE NO. 89:

a. An itemization of the annual costs required for the “Notify” system:
The Notify system costs SUEZ approximately $32,000 per year for unlimited
customer messages, which is charged quarterly $7,800 per quarter, at
$0.08 per customer.

To put that cost in perspective, a single postcard mailing to all SUEZ
customers (with postage) costs approximately $40,000.

b. An explanation why the “Notify” system is required:
SUEZ requires Notify because it provides direct access, using multiple
channels, to our customers within minutes. SUEZ can send a brief text,
email, or phone message to customers alerting them to planned or
unplanned outages, maintenance work in their area, or water quality
concerns.

Notify draws from GIS and our customer information system. After logging
in to the web-based program, the user draws a polygon around the area on
a map that requires communication. We then draft a short message, and
send it via email, phone, or text – or all three. After a quick test to ensure
SUZ-W-20-02
IPUC DR 89 Page 2 of 2
the message is working correctly, customers receive the communication
immediately.

In the past, reaching out to all customers was a lengthy process. Social
media, direct mailings, or news releases can take hours or days to
disseminate to the public with no guarantee the intended audience saw the
message. Notify sends the message directly to the customer – whether a
small neighborhood or our entire service area.

Here are a few examples of how Notify has benefitted SUEZ customers
since its implementation:

• Fewer surprises: Customers receive notify messages before any
planned outages or maintenance that may inconvenience them. This
year, the common discolored water complaint call spike during annual
flushing in the East First Bench and other areas was absent. SUEZ used
Notify to alert customers in sensitive zones the day before crews arrived.
Giving the community a heads up reduced complains and frustration.

• Faster emergency communication: In the event of a main break or
other unplanned outage, SUEZ can alert affected customers
immediately. Notify is especially useful for events affecting large areas,
as hundreds of people can be notified at the same time – much faster
than calling each customer one-by-one. This also frees up customer
service representatives so they can better serve callers. Field crews can
solely focus on repairs rather than going door-to-door.

• Targeted community outreach: Notify was used to alert Bench
residents to a Bench Discolored Water Town Hall webinar over the
summer that provided updates on our efforts to improve water quality.
The residents most affected by discolored water were the ones who
received the message.

SUZ-W-20-02
IPUC DR 90 Page 1 of 1
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 90:

Please provide additional details of the "Cityworks" license mentioned on Page No.
12 of Witness Cary's direct testimony. In the response, please include:

a. An itemization of the annual costs required for the "Cityworks" licensing costs;
b. The number of current licenses and new licenses that will be obtained, and
c. An explanation why additional licenses are required for new employees.

RESPONSE NO. 90:

a. The Cityworks license is a single user fee of $1,635 per user currently, charged
per year with an annual 9% increase until the maximum annual fee or 1,000,000
service connections are reached SUEZ Company wide and thereafter shall
increase by the CPI rate.

There are currently 103 users x $1,635 = $168,405. The test year expense for
Cityworks licenses was $124,500 at $1,500 per user for 83 users with an additional
$2,500 of system support and configuration costs that are not included in annual
costs and are not covered by license fees.

b. There will be an additional license obtained for each new employee.

c. All field related work for construction and maintenance related tasks is scheduled
and tracked in the Cityworks system. All employees who perform work in the field
must utilize the Cityworks system for their daily work assignments and require a
separate license. Supervisors, Managers and Administrative staff along with the
Customer Service Representative call center staff utilize Cityworks as part of the
daily work flow process.
SUZ-W-20-02
IPUC DR 91 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 91:
Please provide additional details for the "SAMS Water Quality" management software
mentioned on Page No. 12 of Witness Cary's direct testimony. In the response,
please include:
a. An itemization of the annual costs required for the SAMS" software costs; and
b. An explanation why the "SAMS" software is required.

RESPONSE NO. 91:

a. The cost for the Idaho Business unit for SAM Water Quality management software
is $29,438. Based on a % of meters company-wide, Idaho pays 16.22% of annual
operating costs (made up of an enterprise license $130K, server costs $59K, less
a $7.5K SUEZ discount).

b. The need for a high fidelity enterprise-wide water quality management system was
recognized following a 2018 Environmental Compliance audit for SUEZ North
America where several non-compliance events were identified. SAMS was
selected as the platform for managing water quality data to standardize sample
locations, schedules, analysis results to aid in compliance reporting and for internal
use for trend analysis and warnings. The standardization would allow for the
consolidation of meaningful data from multiple locations among multiple sites.

Additionally, key features of SAMS include:
• Results reported directly from laboratory into software, reducing error-prone
manual entries
SUZ-W-20-02
IPUC DR 91
Page 2 of 2
• Automating various reports that are now created manually (CCRs CERIS,
state regulatory forms) will reduce errors, improve delivery schedule and
improve resource allocation
• Automating the sample planning process will free up staff that are currently
performing this work manually and reduce the chance of late/missed
samples
• Reducing manual data input and missed sample risks will increase quality
and reliability of water quality data
• Reduce operational risk and avoid expensive compliance related NOVs and
fines through early detection and warnings
• Reduce costs of internal and regulatory reporting activities by leveraging
automation
• Improve and standardize the methods of collecting, analyzing, and reporting
water quality data
• Measure and analyze compliance status, provide early warning limits more
stringent than regulatory requirements
• Interfaces with SCADA to allow for import of real-time data from water
quality sensors

SUZ-W-20-02
IPUC DR 92 Page 1 of 1
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 92:
Please explain the increase in the Safety Expense account for the test year expense
(Line No. 5) compared to the expenses in years 2017 through 2019 provided on Page
No. 24 of Exhibit No. 10, Schedule 1. In the explanation, please identify the specific
changes resulting in the increase compared to these years.

RESPONSE NO. 92:
The test year safety expense of $123,344 compared to years 2017 through 2019
($77,513, $82,398 and $106,700 respectively) can be attributed to a combination of
factors. Our company continues to grow and therefore we incur incremental increases in
safety training and PPE costs each year. We experienced a high rate of employee
turnover in 2019 which continued into 2020. All new employees, employees moving into
new roles and temporary contractors filling in during employee vacancies, all require PPE
and safety training.

The test year includes new costs associated with COVID-19, approximately $8,300 for
respirators and training, signage, sanitization and cleaning supplies. While these costs
are being separately tracked as COVID-19 related expenses, they are included test year
expense and will not be deferred unless costs exceed savings in other categories such
as travel.

Arc flash protective clothing costs increased by approximately $2,500 during the test year
period for new staff. There was also an additional cost of $3,000 for confined space
training that will be repeated in future years along with $2,500 for multimeter test PPE
gloves.

SUZ-W-20-02
IPUC DR 93 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 93:
Please provide additional details for asbestos training mentioned on Page No. 17 of
Witness Cary's direct testimony. In the response, please include:
a. An itemization of the $3,750 annual cost required for asbestos training;
b. A description of asbestos training and cite the safety requirement(s);
c. An explanation for why asbestos training was not included in the test year
expense;
d. A description of how the training is administered (e.g., online, in person); and
If multiple methods of administering the training is available, the cost difference
of the different methods provided in part (d) above.

RESPONSE NO. 93:

a. Asbestos training was budgeted at $250 per person for 30 people for 2021 for
$7,500. This training occurs every two years so the number was normalized to an
annual $3,750 expense in this rate filing. With the hiring of a new EHS&S
manager, it has been identified that we are behind on regulatory training and the
increase in expense will be higher than expected and should be reflected as
$9,500 per year not $3,750.

Two regulatory trainings given by Industrial Hygiene Resources, are required at
two year intervals. There are currently 40 employees that need the training for an
approximate cost of $19,000 every two years (or $9,500 per year).

(1) EPA NESHAP: 8 hour ($225/person) x 40 = $9,000; For Employees
who may remove or disturb asbestos that is present in outdoor locations
(e.g., excavation of asbestos cement pipe).
SUZ-W-20-02
IPUC DR 93
Page 2 of 2
(2) Asbestos Operations and Maintenance (O&M) initial: 16 hour
($250/person) x 40 = $10,000; meets Class III and Class IV work; repair or
maintenance involving asbestos materials when projects do not include
removal or abatement of asbestos materials.

b. The training is focused on identifying the hazards of asbestos coated pipe for
the purposes of maintenance or demolition to protect SUEZ employees and
the general public.

Training requirements are promulgated under the Occupational Safety and
Health Administration OSHA 29 CFR 1910.1001; 29 CFR 1926.1101(a) (1)
thru (8); under the Environmental Protection Agency National Emission
Standards for Hazardous Air Pollutants (NESHAP), 40 CFR Part 61 Subpart M
(61.145(c) (8).

c. Asbestos training costs were not included in the test year because the training
was not conducted due to employee turnover and vacancies in the EHS&S
department.

d. The training is classroom led by a subject matter expert qualified OSHA trainer
under the direction of an Industrial Hygienist. No other training options are
available, thus the cost estimates detailed above are required to bring training
of staff up to date.

SUZ-W-20-02
IPUC DR 94 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 94:
Please provide additional details for asbestos and chemical exposure assessment
mentioned on Page No. 17 of Witness Cary's direct testimony. In the response,
please include:
a. An itemization of the $8,000 annual cost required for the asbestos and
chemical exposure assessment;
b. A description of asbestos and chemical exposure assessment and cite the
safety requirement(s); and
An explanation for why the asbestos and chemical exposure assessment costs were
not included in the test year expense.

RESPONSE NO. 94:

a. SUEZ conducts chemical exposure assessments on as added needed basis. The
$8,000 amount was based on costs incurred during 2019 for monitoring during well
head cleaning. We paid $7,805 in 2019 for chemical assessment to understand
exposure risk and PPE needs while chemicals were being mixed and injected
during chemical rehabilitation of one of our production wells. With the hiring of a
new EHS&S manager, it is consistent with our best practices to conduct a similar
assessment each year during another high risk activity to ensure the correct
protocols and PPE are in use.

b. Asbestos and Chemical exposures are two distinctly different concerns.
Historically there have been no asbestos assessments performed by the third party
contractor (Industrial Hygiene Resources). Asbestos hazards are present when
asbestos is encountered and are not measured using atmospheric monitoring.
Employees are trained on safe handling procedures through the NESHAP and
SUZ-W-20-02
IPUC DR 94
Page 2 of 2
O&M training courses.

Chemical exposure assessments however involve atmospheric monitoring during
chemical cleaning of well screens. This assessment requires a third partly
contractor (Industrial Hygiene Resources) setting up monitoring devices during the
cleaning process to measure presence/absence of atmospheric contamination
resulting from chemical fumes or vapor. The measurement is taken in parts per
million (PPM) and used to determine employee exposure. Safe exposure levels
(Threshold Limit Values) are set by the American Congress of Industrial
Hygienists. There are three categories of TLVs. Time Weighted Averages, (TWA),
Short Term Exposure Limits (STEL), and a ceiling. The level of exposure
determines the type of PPE necessary and the amount of air exchange required
to maintain safe levels of oxygen during the cleaning process. Assessments and
monitoring are required to determine appropriate safe work practices and PPE,
such as the need for respiratory protection.

As mentioned, exposure assessments are done based on operational needs, not
a set frequency. The cost basis described above for the activity in 2019 was
conducted in May of 2019 which fell outside of the test year timeframe.
SUZ-W-20-02
IPUC 95 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary
REQUEST NO. 95:
Please provide additional details for the personal protection expense mentioned on Page
No. 17 of Witness Cary's direct testimony. In the response, please include:
a) An itemization of the $10,663 annual cost required for personal protection; and
b) A description of personal protection expense and cite the safety requirement(s).

RESPONSE NO. 95:
Please see the Attachment for an itemization and description of the personal protective
equipment. The $10,663 annual personal protection expense cost (PPE) is based on
$1,066.25 per employee cost for 10 additional employees representing the annual
expense not captured in the June 2020 test year amount due filling of vacancies and
newly hired positions.

The Company’s bargaining unit contract provided in response to Request No 48 itemizes
required PPE and uniform protective clothing on page 29 of the contract under Article 23
Safety, Protective clothing, and uniforms.

PPE requirements are covered in OSHA’s General Duty Clause which is found
under the Occupational Safety and Health Act of 1970, and sets the requirement
for the employer:
Section 5 (a)
Each employer –
(1) “Shall furnish to each of his employees employment and a place of
employment which are free from recognized hazards that are causing or are likely
to cause death of serious physical harm to his employee;”

SUZ-W-20-02
IPUC 95
Page 2 of 2
PPE is covered under both 29 CFR 1910 (General Industry) and in majority of our
situations under 29 CFR 1926 (Construction).
29 CFR 1926.95 (a)
“Protective equipment, including personal protective equipment for eyes, face, head, and
extremities, protective clothing, respiratory devices, and protective shields and barriers,
shall be provided, used, and maintained in a sanitary manner and reliable condition
wherever it is necessary by reason of hazards of processes or environment, chemical
hazards, radiological hazards, or mechanical irritants encountered in a manner capable
of causing injury or impairment in the function of any part of the body through absorption,
inhalation, or physical contact.”

To specifically tie this to the company’s responsibility to provide PPE to
employees, go to:
29 CFR 1926.95 (d) (1)
“Except as provided by paragraphs (d) (2) through (d) (6) of this section, the protective
equipment, including personal protective equipment (PPE), used to comply with the last
part, shall be provided by the employer at no cost to the employee.”

COST PER PERSON TO OUTFIT WITH PPE Costs current as of 8/2020
TOTAL = $ 1066.25 PER EMPLOYEE
Itemization Total
SHIRTS - SHORT / LONG / STYLE X 5 $7.88 - $32.00 58.46$
BOOTS - STEEL TOE, COMPANY ALSO PAYS FOR RUBBER BOOTS STEEL TOE WORK BOOT $225.00 225.00$
RUBBER STEEL TOE $100.00 100.00$
JACKET -$130.00 130.00$
COVERALLS -$80.00 80.00$
SWEATSHIRTS -$34.00 34.00$
HATS - SUMMER / WINTER X 2 $6.95 - $14.25 21.20$
GLOVES - LEATHER / WINTER / SUMMER $4.79 - $21.00 21.00$
SAFETY GLASSES -$2.88 - $44.05 44.05$
VEST -$17.66 - $21.31 21.31$
EAR PROTECTION -$0.13 - $25.29 25.29$
RAIN GEAR -$31.00 - $100.00 100.00$
HARDHAT -$27.80 27.80$
HEADLAMP -$178.14 178.14$
TOTAL PPE COST PER EMPLOYEE 1,066.25$
10 new staff 10
Additional annual PPE Cost 10,663$
SUZ-W-20-02 IPUC DR 95 Attachment
Page 1 of 1
SUZ-W-20-02
IPUC DR 98 Page 1 of 1
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary

REQUEST NO. 98:
Please provide an update to the SUZ-W-19-01 Semi-Annual Deferred Convenience Fee
Report filed in November 2020 to include costs through November 2020.

RESPONSE NO. 98: Please see the attachment for deferred convenience fees through November 2020.

CASE NO. SUZ-W-20-02

Response No. 98 Attachment

Excel Spreadsheet Provided Separately
in Native Format

SUZ-W-20-02
IPUC DR 99 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cagle

REQUEST NO. 99:
Please provide additional information related to the 20% purchase of SUEZ Water
Resources LLC by PGGM as stated in Witness Cagle's direct testimony, Page No. 3,
Line Nos. 17 and 18. Please identify all SUEZ Water Idaho ratepayer benefits from the
sale?
RESPONSE NO. 99:
The 20% purchase of SUEZ Water Resources (SWR) by PGGM (the “Transaction”) has
had no adverse impact on the provision of safe, adequate and proper utility service
especially in light of the non-controlling minority position of PGGM and the subsidiary
relationship of SUEZ Water Idaho Inc. (SWID). SWID remains committed to providing
safe, adequate and proper utility service, and the Transaction has not and will not
diminish this commitment in any way. The Transaction will help SWR finance capital
expenditures in the regulated water and wastewater sectors, which are planned to
increase from a five year historic average of approximately $190 million to an average
from 2019 through 2022 of about $305 million per year. For SWID, the five year historic
average of approximately $15 million was anticipated at the time of the transaction to
increase to approximately $19 million. Currently, capital planning going forward is
estimated to average approximately $35 million per year through 2024.

In addition, the S&P credit rating of SWR was upgraded from aa- to aa primarily due to
the resulting transaction described in attachment 1 to this response. As stated on page
SUZ-W-20-02
IPUC DR 99 Page 2 of 2
two of the attachment, “While we assess the above structural insulating measures as
sufficient to insulate the ratings on SWR from the group credit profile by as many as
three notches, we are upgrading SWR one notch above the group credit profile because
the issuer credit rating on SWR is limited by its SACP. We rate SWNJ in line with SWR
since we consider it to be an integral and fully supported subsidiary of SWR that is
dependent on SWR for its financing arrangements. Furthermore, we deem SWR to be a
strategically important subsidiary of SEV.”

The Company believes that such an improvement will result in the ability to borrow in the
future at lower rates than under the previous structure.
Research Update:
SUEZ Water Resources LLC And Subsidiary Ratings
Raised To 'A' Following Updated Methodology;
Ratings Off UCO
September 5, 2019
Rating Action Overview
- We have reviewed our ratings on SUEZ Water Resources LLC (SWR) and its subsidiary SUEZ
Water New Jersey Inc. (SWNJ) that we labeled as "under criteria observation" (UCO) after
publishing our revised Group Rating Methodology criteria on July 1, 2019.
- Following this review, we established that the cumulative value of the structural protections in
place between SWR and ultimate parent SUEZ S.A. (SEV) are sufficient to insulate our issuer
credit rating on SWR from the credit profile of ultimate parent SEV.
- As such, we are raising our long-term issuer credit ratings on SWR and SWNJ to 'A' from 'A-' and
are removing our ratings on both companies from UCO.
- We are also raising our issue-level ratings on SWR's senior unsecured debt and SWNJ's
secured debt to 'A' from 'A-'.
- At the same time, we are revising our stand-alone credit profile (SACP) on SWNJ to 'aa' from
'aa-', consistent with management's strategy to gradually reduce its debt at the SWNJ utility
level. Because of the absence of insulating measures between SWNJ and SWR, the ratings on
SWNJ are equalized with those on SWR.
- The stable outlooks largely reflect our view of SWR's low-risk, rate-regulated water and
wastewater utility operations as well as our expectation that management will continue to
reach constructive regulatory outcomes and avoid any meaningful rise in business risk. The
outlooks also reflect our base-case forecast of adjusted funds from operations (FFO) to debt of
about 13%-16% over the next few years.
Rating Action Rationale
The upgrades follow our review of our ratings on SWR and SWNJ under our revised Group Rating
Methodology criteria, which we published on July 1, 2019. Following this review, we removed our
ratings on the companies from UCO.
Research Update:
SUEZ Water Resources LLC And Subsidiary Ratings
Raised To 'A' Following Updated Methodology;
Ratings Off UCO
September 5, 2019
PRIMARY CREDIT ANALYST
Sloan Millman
New York
+ 1 [phone]
[e-mail]
SECONDARY CONTACT
Obioma Ugboaja
New York
+ 1 [phone]
obioma.ugboaja
@spglobal.com
www.spglobal.com/ratingsdirect September 5, 2019 1
SUZ-W-20-02
IPUC DR 99 Attachment
Page 1 of 8
Under our revised criteria, we view the strength of SWR's SACP, as well as the cumulative value of
structural protections in place that insulate SWR from SEV, as reason to warrant the upgrades.
Our analysis of the insulating measures takes into account the following:
- The intermediary holding company between SWR and SEV (SUEZ Utility Holdings Inc.) is a
separate legal entity with its own capital structure, maintains its own records, does not
commingle funds, assets, or cash flows with the rest of the SEV group, and does not participate
in a money pool with the rest of the SEV group;
- SWR has its own credit facility and debt arrangements and has operations that are separate
from the rest of the SEV group;
- We believe there is a strong economic basis for the SEV group to preserve the credit strength of
SWR, reflecting SWR's low risk, profitable, and regulated operations;
- PGGM is a significant minority shareholder of SUEZ Utility Holdings Inc. and has an active
economic interest with board member representation;
- The governance rights in place for PGGM surrounding matters such as dividend distributions
and voluntary bankruptcy filings support our view that there are independent directors who
have effective influence on decision making;
- Anti-dilutive measures in place to ensure that PGGM can maintain its economic interest at
current levels; and
- There are no cross-default provisions between the rest of the SEV group and SUEZ Utility
Holdings Inc. (or its subsidiaries) and the minority shareholder's governance rights supports our
opinion that a default at SEV would not directly lead to a default at SWR or its subsidiaries.
While we assess the above structural insulating measures as sufficient to insulate the ratings on
SWR from the group credit profile by as many as three notches, we are upgrading SWR one notch
above the group credit profile because the issuer credit rating on SWR is limited by its SACP. We
rate SWNJ in line with SWR since we consider it to be an integral and fully supported subsidiary of
SWR that is dependent on SWR for its financing arrangements. Furthermore, we deem SWR to be a
strategically important subsidiary of SEV.
Our assessment of SWR's and SWNJ's business risk profiles are based on both entities' lower-risk
and rate-regulated water and wastewater utility businesses. SWR serves about 2.1 million
customers across New Jersey, New York, Delaware, Rhode Island, Pennsylvania, and Idaho,
whereas SWNJ serves about 1.2 million customers in New Jersey and New York. We view both
companies' management of regulatory risk as above average, partially reflecting the extensive use
of constructive regulatory mechanisms, including distribution system improvement charge (DSIC)
riders, a revenue decoupling mechanism, and multiyear rate plans in certain jurisdictions. Under
our base-case scenario, we expect that the companies will continue to effectively manage
regulatory risk, in part due to the frequency of rate case filings, and will continue to use riders that
we collectively view as favorable for both companies' credit quality.
We assess SWR's and SWNJ's financial risk profiles using our low-volatility financial benchmark
table, which reflects the companies' lower-risk, regulated utility businesses, and effective
management of regulatory risk. Under our base-case scenario for SWR of capital spending
averaging about $300 million-$350 million through 2021, dividend payments to its owners
commensurate with the company's capital structure, continued rate case filings, and further use
of the DSIC, we expect SWR's FFO to debt to be 13%-16%, consistent with the lower end of the
range for the intermediate financial risk profile category. This warrants our use of a negative
comparable ratings analysis modifier, which results in a one-notch downward adjustment to the
www.spglobal.com/ratingsdirect September 5, 2019 2
Research Update: SUEZ Water Resources LLC And Subsidiary Ratings Raised To 'A' Following Updated Methodology; Ratings Off UCO
SUZ-W-20-02
IPUC DR 99 Attachment
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company's SACP.
Given SWR's strategy to provide funding to SWNJ going forward without issuing debt at the SWNJ
level, we expect financial measures at SWNJ to strengthen, indicative of the minimal financial risk
profile category. Specifically, under our base-case scenario of capital spending that averages
about $200 million through 2021, continued rate case filings, and further use of the DSIC, we
expect SWNJ's FFO to debt to consistently exceed 35%. However, given our holistic view of the
company's business risk, financial risk, and dependence on SWR for financing needs, we utilize a
negative comparable ratings analysis modifier to lower SWNJ's SACP by one notch.
Outlook
The stable outlooks on SWR and SWNJ reflect our view of SWR's low-risk, rate-regulated water
and wastewater utility operations as well as our expectation that management will continue to
reach constructive regulatory outcomes and avoid any meaningful rise in business risk. The
outlooks also reflect our base-case forecast of adjusted FFO to debt at SWR and SUEZ Utility
Holdings Inc. of about 13%-16% over the next few years. Furthermore, the outlook reflects our
expectation that the companies' unrated ultimate parent SEV will continue to maintain a diverse
mix of businesses and financial measures that do not materially deviate from our current view of
the overall group credit profile.
Downside scenario
We could lower our ratings on SWR and SWNJ over the next 24 months if unrated intermediary
holding company SUEZ Utility Holdings Inc.'s financial measures weakened such that we forecast
FFO to debt to be consistently below 12%. We could also lower the ratings if the structural
insulating measures currently in place weaken.
Upside scenario
We could raise the ratings on SWR and SWNJ if SUEZ Utility Holdings Inc.'s financial measures
strengthen, reflecting FFO to debt consistently greater than 16%.
Liquidity– SUEZ Water Resources LLC
SWR has adequate liquidity in our view and can cover its needs for the next 12 months, even if
EBITDA declines by 10%. We expect the company's liquidity sources over the next 12 months will
exceed uses by more than 1.1x. Under our stress scenario, we do not expect that SWR would
require access to the capital markets to meet its liquidity needs. SWR also benefits from generally
prudent risk management, sound relationships with banks, and a generally satisfactory standing
in the credit markets.
Principal Liquidity Sources
- Credit facility availability of about $150 million;
- FFO of about $205 million; and
- Proceeds from sale of assets of about $5 million-$10 million.
Principal Liquidity Uses
www.spglobal.com/ratingsdirect September 5, 2019 3
Research Update: SUEZ Water Resources LLC And Subsidiary Ratings Raised To 'A' Following Updated Methodology; Ratings Off UCO
SUZ-W-20-02
IPUC DR 99 Attachment
Page 3 of 8
- Long-term debt maturities of about $5 million;
- Maintenance capital spending of about $180 million; and
- Dividends to owners commensurate with the company's capital structure.
Liquidity– SUEZ Water New Jersey Inc.
SWNJ has adequate liquidity in our view and can cover its needs for the next 12 months, even if
EBITDA declines by 10%. We expect the company's liquidity sources over the next 12 months will
exceed uses by more than 1.1x. Under our stress scenario, we do not expect that SWNJ would
require access to the capital markets to meet its liquidity needs. SWNJ also benefits from
generally prudent risk management, sound relationships with banks, and a generally satisfactory
standing in the credit markets.
Principal Liquidity Sources
- FFO of about $115 million; and
- Expected ongoing support from SWR as needed.
Principal Liquidity Uses
- Minimal long-term debt maturities;
- Maintenance capital spending of about $115 million; and
- Dividends to SWR commensurate with the company's capital structure.
Issue Ratings - Subordination Risk Analysis
Capital structure
SWR's capital structure includes close to $975 million of consolidated senior unsecured debt,
including about $155 million of debt issued at SWNJ.
Analytical conclusions
We rate SWR's senior unsecured debt 'A', in line with our issuer credit rating on the company, due
to the lack of material priority debt in the company's capital structure.
We rate the senior secured debt at SWNJ 'A', as we view it as unsecured debt of a qualifying
investment grade utility as per our criteria.
Ratings Score Snapshot– SUEZ Water Resources LLC
Issuer Credit Rating
A/Stable/--
Business risk: Excellent
- Country risk: Very low
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SUZ-W-20-02
IPUC DR 99 Attachment
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- Industry risk: Very low
- Competitive position: Excellent
Financial risk: Intermediate
- Cash flow/Leverage: Intermediate
Anchor: a+
Modifiers
- Diversification/Portfolio effect: Neutral (no impact)
- Capital structure: Neutral (no impact)
- Financial policy: Neutral (no impact)
- Liquidity: Adequate (no impact)
- Management and governance: Satisfactory (no impact)
- Comparable rating analysis: Negative (-1 notch)
Stand-alone credit profile: a
- Group credit profile: a-
- Entity status within group: Insulated
Ratings Score Snapshot– SUEZ Water New Jersey Inc.
Issuer Credit Rating
A/Stable/--
Business risk: Excellent
- Country risk: Very low
- Industry risk: Very low
- Competitive position: Excellent
Financial risk: Minimal
- Cash flow/Leverage: Minimal
Anchor: aa+
Modifiers
- Diversification/Portfolio effect: Neutral (no impact)
- Capital structure: Neutral (no impact)
- Financial policy: Neutral (no impact)
- Liquidity: Adequate (no impact)
- Management and governance: Satisfactory (no impact)
- Comparable rating analysis: Negative (-1 notch)
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SUZ-W-20-02
IPUC DR 99 Attachment
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Stand-alone credit profile: aa
- Group credit profile: a
- Entity status within group: Core (-3 notches below the SACP)
Related Criteria
- General Criteria: Group Rating Methodology, July 1, 2019
- Criteria | Corporates | General: Corporate Methodology: Ratios And Adjustments, April 1, 2019
- Criteria | Corporates | General: Reflecting Subordination Risk In Corporate Issue Ratings, March
28, 2018
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- Criteria | Corporates | General: Methodology And Assumptions: Liquidity Descriptors For Global
Corporate Issuers, Dec. 16, 2014
- Criteria - Corporates - Industrials: Key Credit Factors For The Environmental Services Industry,
Feb. 12, 2014
- General Criteria: Country Risk Assessment Methodology And Assumptions, Nov. 19, 2013
- Criteria | Corporates | General: Corporate Methodology, Nov. 19, 2013
- Criteria | Corporates | Utilities: Key Credit Factors For The Regulated Utilities Industry, Nov. 19,
2013
- General Criteria: Methodology: Industry Risk, Nov. 19, 2013
- General Criteria: Methodology: Management And Governance Credit Factors For Corporate
Entities, Nov. 13, 2012
- General Criteria: Use Of CreditWatch And Outlooks, Sept. 14, 2009
Ratings List
Upgraded
To From
SUEZ Water Resources LLC
SUEZ Water New Jersey Inc.
Issuer Credit Rating A/Stable/--A-/Stable/--
SUEZ Water Resources LLC
Senior Unsecured A A-
SUEZ Water New Jersey Inc.
Senior Secured A A-
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors,
have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such
criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings
information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating
www.spglobal.com/ratingsdirect September 5, 2019 6
Research Update: SUEZ Water Resources LLC And Subsidiary Ratings Raised To 'A' Following Updated Methodology; Ratings Off UCO
SUZ-W-20-02
IPUC DR 99 Attachment
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action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search
box located in the left column.
www.spglobal.com/ratingsdirect September 5, 2019 7
Research Update: SUEZ Water Resources LLC And Subsidiary Ratings Raised To 'A' Following Updated Methodology; Ratings Off UCO
SUZ-W-20-02
IPUC DR 99 Attachment
Page 7 of 8
www.spglobal.com/ratingsdirect September 5, 2019 8
Research Update: SUEZ Water Resources LLC And Subsidiary Ratings Raised To 'A' Following Updated Methodology; Ratings Off UCO
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SUZ-W-20-02
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SUZ-W-20-02
IPUC DR 101 Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cagle

REQUEST NO. 101:
Please provide additional descriptions of the M&S Shared Services departments and the
cost-benefit analysis of them being located outside of Idaho.

RESPONSE NO. 101:
Please refer to Attachment 1 SUEZ Water Management &Services Inc. (SWM&S). Cost
Allocation Manual that provides descriptions of the different departments that constitute
the M&S Shared Services.

Service Company is set up to provide a common suite of services to the different SUEZ
Water affiliates. This enables significant specialization and provides the scale to enable
investment in sophisticated information systems to support all processes. Often,
corporate acquisitions of additional utility service providers result in an increasing ability
to share the costs of these specialized services over a greater base. The economies of
scale benefit ratepayers by the “sharing” of services and costs among affiliates thus
reducing the costs to individual affiliates.

The services provided by SWM&S are critical all year round to provide standardization
and synergies across the business units. The importance of SWM&S services provided,
which were highlighted in wake of the Coronavirus pandemic, were vital to the ongoing
operations of the business. During the outbreak, many of the SM&S employees were
working remotely. We have learned through discussions with management, the only way
SUEZ was able to maintain ongoing operations was with the help and support of the
information technology services provided by SM&S.

SUZ-W-20-02
IPUC DR 101
Page 2 of 2
SWM&S continues to provide the business units with needed services. For example,
Procurement and Supply Chain Management ensures the business units receive good
pricing, EHS continues to develop a safe culture throughout SUEZ, and Human
Resource Services ensures policies that apply to corporate are the same across the
utility business (i.e., compensation, merit 29 increases etc.). Human Resource Services
also provides; recruiting, hiring and retirement services to the business units.

In 2015 and 2020, PA Consulting performed a comprehensive review of the services
SUEZ Water M&S offered to Suez Water New York Inc. and Suez Water Pennsylvania
Inc. respectively, both subsidiaries of Suez Water Resources similar to Suez Water
Idaho Inc. The result of the studies (attached to this response as Attachment 2 and
Attachment 3) are relevant as they benchmark Suez M&S shared services to other utility
companies. Though not performed directly for services to SUEZ Water Idaho, the results
summarize the costs and benefits of the shared services offered by SUEZ Water M&S
Services.

SUEZ North America, Inc.
&
SUEZ Water Management & Services, Inc.
Cost Allocation Manual
SUZ-W-20-02 IPUC DR 101 Attachment 1
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SUEZ Management & Services, Inc. – Cost Allocation Manual

2

I N D E X

Table of Contents

Section Subject Page
1 Introduction 3
2 Responsibility for Maintaining the CAM 3
3 Definitions 3
4 General Principles 5
5 SUEZ Organizational Structure 6
6 Description of Services Provided by M&S to SNA Affiliates 6
7 Services Provided by Affiliates Other Than M&S 13
8 Cost Allocation Methodology 14
9 Time Reporting Procedures 16
10 Mid-Year Changes 16
11 Reporting 17
12 Distribution 17
13 Shared Services Assets 17
Appendix A Sample Service Agreement
Appendix B Organization Charts
Appendix C Allocation Factor Calculation

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SUEZ Management & Services, Inc. – Cost Allocation Manual

3
1. Introduction
SUEZ North America, Inc. (“SNA”), a wholly owned of Suez Inc., a publicly traded
company based in France, is a water utility holding company with operating utility
subsidiaries throughout the United States, which are directly owned by SNA’s
intermediate subsidiary, SUEZ Water, Inc.
SUEZ Water Management and Services, Inc. (M&S or Shared Services Company)
provides administrative, engineering, legal, operations, accounting, finance, human
resources, purchasing, insurance, data processing, customer service, billing, public
relations, planning and ratemaking services, collectively known as "Shared Services" to
the operating subsidiaries of SUEZ Water, Inc., as listed in Appendix B.
M&S also provides Shared Services to SUEZ Water Environmental Services, Inc. (SUEZ
Environmental), which provides non-regulated water distribution services to several
municipalities throughout the United States and limited services to SUEZ Treatment
Solutions Inc. and Utility Service Group Inc.
M&S is a wholly owned subsidiary of SUEZ Water, Inc., which is a wholly owned
subsidiary of SNA.
The provision of shared services from M&S to its regulated affiliates throughout SNA,
are specified in service agreements filed with the appropriate regulatory commissions.
The services provided are listed below.
The purpose of the Cost Allocation Manual (“CAM”) is to prescribe the manner in which
costs will be charged to the regulated and non-regulated affiliates of SNA. The prevailing
premise of these cost allocation guidelines is that allocation methods should not result in
subsidization of the non-regulated services or products by regulated entities unless
specifically authorized by the regulator.
These guidelines serve to lessen the possibility of subsidization in order to protect SUEZ
ratepayers and to help establish and preserve competition in the water supply and related
competitive services markets. The guidelines also provide flexibility to accommodate
exceptions where the outcome is in the best interest of the utility, its ratepayers and
competitors. The burden of proof for any exception from the general rule rests with M&S.
This Cost Allocation Manual addresses the allocation of the costs of services provided
by M&S to its affiliates within SNA.
2. Responsibility for Maintaining the CAM
The overall responsibility for the Company’s cost allocation policies and procedures will
be with the Regulated Segment Vice President & Chief Financial Officer. The day-to-
day responsibility for maintaining the CAM and ensuring that accounting records reflect
the policies and procedures described in the CAM will be that of the M&S Corporate
Controller.
3. Definitions
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4
a. Affiliates - companies that are related to each other due to common ownership or
control.
b. Commission – Appropriate State Regulatory Commission (e.g. New York Public
Service Commission).
c. Cost Allocation Manual (CAM) - an indexed compilation and documentation
of the Company's cost allocation policies and related procedures.
d. Cost Allocations - the methods or ratios used to apportion costs. A cost allocator
can be based on the origin of costs, as in the case of cost drivers; cost-causative
linkage of an indirect nature; or one or more overall factors (also known as
general allocators).
e. Cost Center – a function or service where costs are accumulated.
f. Common Costs - costs associated with services or products that are of joint
benefit among regulated and non-regulated business units.
g. Cost Driver - a measurable event or quantity which influences the level of costs
incurred and which can be directly traced to the origin of the costs themselves.
h. Cross-subsidization – the offering of a competitive product and/or service by a
public utility, or the offering of a product and/or service by an affiliate, which
relies in whole or in part on the utilization of utility employees, equipment or
other assets, and for which full compensation (via cost allocation or direct
payment), as determined by the Commission, has not been provided for the use
of such public utility assets, resulting in the inappropriate transfer of benefits from
the utility ratepayers to the competitive product and/or service or affiliate.
i. Department – a function or service for which costs are accumulated.
j. Direct Costs - costs that can be specifically identified with a particular service or
product.
k. Fully Allocated Costs – the sum of the direct, indirect and other economic costs
of all equipment, vehicles, labor, related fringe benefits and overheads, real estate,
furniture, fixtures, computer hardware and software, and other administrative
resources utilized, and other assets utilized and costs incurred, directly or
indirectly in the providing of services from the utility to an affiliate.
l. Indirect Costs - costs that cannot be identified with a particular service or
product. This includes but is not limited to overhead costs, administrative and
general, and taxes.
m. Non-Regulated – those entities, products and services which are not subject to
regulation by regulatory authorities.
n. Regulated - that which is subject to regulation by relevant regulatory authorities.
o. Shared Services – administrative and support services that do not involve
merchant functions, including by way of example: payroll, taxes, shareholder
services, insurance, financial reporting, financial planning and analysis, corporate
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5
accounting, corporate security, human resources (compensation, benefits,
employment practices), employee records, regulatory affairs, lobbying, legal, and
pension management.
p. Shared Services Assets – primarily computer hardware and software related,
shared services assets are assets utilized by Shared Services and/or utilized in
common among affiliates.
q. Subsidization - the recovery of costs from one class of customers or business
unit, which are more properly attributable to another.
4. General Principles
The following principles guide the allocation of costs for products or services provided
by M&S to its regulated and non-regulated affiliates.
 To the extent practicable, in consideration of administrative costs, costs should
be collected and classified on a direct basis for each asset, service or product
provided;
 The general method for charging indirect costs should be on a fully allocated,
cost-causative allocation basis;
 All direct and allocated costs between regulated and non-regulated services and
products should be traceable on the books of the applicable regulated utility to
the applicable Uniform System of Accounts to the extent possible;
 Documentation should be made available to the appropriate regulatory authority
upon request regarding transactions between the regulated utility and its affiliates;
 Costs should be classified to services or products which, by their very nature, are
either regulated, non-regulated, or common to both; and,
 The primary cost driver of common costs, or a relevant proxy in the absence of a
primary cost driver, should be identified and used to allocate the cost between
regulated and non-regulated services or products and between regulated entities.
5. SUEZ Organizational Structure
SNA is a holding company that provides water and wastewater services to over 7.5
million people in North America through its subsidiaries. See Appendix C for an
organization chart of the SNA Corporate Structure.
The table below identifies the SNA affiliates including SUEZ Water Management &
Services at December 31, 2015.
SNA Affiliates
Affiliate Description of Business
SUEZ North America (SNA) Holding company for all North America affiliates.
It is wholly owned by SUEZ, S.A.S.
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6
SUEZ Water, Inc. (SWI)
Holding Company for M&S and the regulated and
non-regulated USA water and wastewater
operations.
SUEZ Water Resources, Inc. (SWR)
Owns and operates regulated water and
wastewater utilities.
Also operates municipal water and waste water
systems through public-private partnerships.
Regulated Water & Wastewater Utilities
 SUEZ Water Arlington Hills Sewer Inc.
 SUEZ Water Bethel Inc.
 SUEZ Water Delaware Inc.
 SUEZ Water Idaho Inc.
 SUEZ Water West Milford Sewer Inc.
 SUEZ Water New Jersey Inc.
 SUEZ Water New Rochelle Inc.
 SUEZ Water New York Inc.
 SUEZ Water Owego Inc.
 SUEZ Water Pennsylvania Inc.
 SUEZ Water Princeton Meadows Inc.
 SUEZ Water Rhode Island Inc.
 SUEZ Water South County Sewer Inc.
 SUEZ Water Toms River Inc.
 SUEZ Water Westchester
SUEZ Water Management & Services,
Inc. (M&S)
M&S provides administrative, engineering, legal,
operations, accounting, finance, human
resources, purchasing, insurance, data
processing, customer service, billing, public
relations, planning and ratemaking services,
collectively known as “Shared Services” to the
operating subsidiaries of SNA.
SUEZ Water Environmental Services, Inc.
Parent company for the SNA non-regulated
subsidiaries:
 Bayonne Water
 Middletown Water
 SUEZ Water Indiana
 SUEZ Water Long Island
 SUEZ Water Mississippi

SUEZ Treatment Solutions Inc. Provides local authorities and industries with
water treatment solutions and services.
SUEZ Utility Services Group
Provides comprehensive condition assessments,
rehabilitation services and sustainable asset
management solutions to help municipal and
industrial water industries manage their water
systems.
6. Description of M&S Products and Services Provided To SNA Affiliates
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SUEZ Water Management & Services, Inc. (M&S) is a wholly owned subsidiary of
SUEZ Water, Inc., which is a wholly owned subsidiary of SUEZ North America, Inc.
(SNA).
M&S provides administrative, engineering, legal, operations, accounting, finance,
human resources, purchasing, insurance, data processing, customer service, billing,
public relations, planning and ratemaking services, collectively known as "Shared
Services" to the subsidiaries of SNA. These services are described below.
Services Provided By M&S

Service Provided Description of Services Provided
Executive Services
This includes executive management and support in the Office of
the CEO, the Office of the COO, and other executive positions not
otherwise described herein.
Financial Planning
Assessing the business environment; identification of key issues;
developing business unit strategies and objectives, and
examination of alternatives; developing multi-year earnings,
margin, cash, O&M, and capital plan; modeling the financial impact
of new capital investments and balance sheet restructuring;
forecasting for regulatory filings; performing analytic support for
external stakeholders, and governing corporate capital
expenditures;
Develop business unit and department financial business plans for
the next year including earnings, margin, cash, O&M and capital
plans;
Perform analysis of results and prepares variance commentary for
earnings, margin, O&M, and Capital within the Company and
business unit;
Prepare and revise forecasts for earnings, margin, cash, O&M, and
Capital within the business units; and,
Review actual information and projects the remainder of the current
year future years. This function performs “what-if” analysis for
various scenarios for business unit decision-making.
Accounting and Tax
Managing the monthly closing process including account
reconciliations, accounting issue resolution, and process
improvement; preparing standard monthly journal entries and
analysis to support accounting;
Managing the accounting for fixed assets including: work order
creation and set-up, analysis and monitoring of capital projects;
creating and managing fixed asset records including asset
addition, retirements, transfers or adjustments and the
preparation of any related journal entries and account
reconciliations; reporting of plant asset information for financial,
audits, regulatory reporting, rate cases or other internal needs;
process associated with the development, analysis, and
accounting for depreciation;
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Service Provided Description of Services Provided
Managing accounting policies, GAAP research, and
implementation of new accounting pronouncements; providing
guidance on accounting issues; communicating any new
accounting guidelines and procedures and their impact to
appropriate organizations organization;
Determining technical accounting details for specific transactions;
performs research, consultations with external audit and guidance
provided to the Company;
Preparing and filing standard regulatory reports, and other
mandated reports as well as with preparing the accounting
information needed to complete the annual report;
Ensure accurate accounting in all accounts.
Perform tax services including audit of assessed property taxes,
payment of property taxes, and the accounting for property taxes.
Develop long-range tax planning to optimize tax positions for the
Company; this also involves analysis of laws and regulations as
they impact the company’s interest;
File federal state and local tax returns and defends all related
income tax audits as well as all applicable sales, use, and gross
receipts tax returns; and,
Ensure proper accounting in all tax accounts.
Treasury
Short term borrowing and investing, including activities such as,
commercial paper issuance and associated activity or issuance
fees, rating agency activity or issuance fees, money, cash pooling,
EFT originations, tax payments, intercompany loans
administration of transactions and daily settlement, determining
daily cash position, and costs for issuing and paying agents;
Daily cash account reconciliations, treasury workstation
administration; bank or third-party fees, such as service charges,
positive pay fees, and security related fees for both utility and non-
utility account; all bank credit facility costs (e.g. bank lines, credit
lines, revolvers) including any upfront fees and on-going fees;
Develop a long-range financing and dividend strategy consistent
with the targeted credit profile, setting balance sheet targets,
developing and recommending hurdle rates for the company’s
business lines; and,
Rating agency relations includes managing communications with
the agencies and includes annual rating maintenance fees and
commercial paper surveillance fees.
Internal Audit
Performs independent, objective assurance and control advisory
services. This includes all audits as well as development of forward
looking audit plans that are independent and reviewed with the
Company's Audit Committee; and,
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Service Provided Description of Services Provided
Manage and administer corporate ethics compliance programs,
including codes of conduct requirements, whistle-blower cases,
ombudsmen services, and associated compliance reporting.
Information Technology
Operate and monitor data center infrastructure and applications,
backup & restore services, change management administration,
batch job management, hardware and software installation and
decommissioning;
Technical support, problem resolution, and the application of minor
enhancements, upgrades and patches to applications;
Develop, support and manage methodologies and measurements
for effective delivery of business solutions; and,
Design, develop, test and implement new information technology
and new information technology standards and tools for computing
environments.
Provide support center user interface as well as Tier 1 and Tier 2
support for End User support requests;
Install, maintain and resolve service problems for end user
computing devices, software, LANs and peripherals;
Manage the installation, operation, and on-going network security
administration including: identity and access management, user
provisioning, access control, monitoring and managing security
systems including firewalls, IDS/IPS, and event management
systems, vulnerability management (patching and antivirus
administration), etc.;
Architecture design, implementation, technical support, problem
resolution, application of minor enhancements, upgrades and
patches for operating and financial systems;
Monitor security events, assists with information gathering for
required system audits and provides project management support
for new system implementations, upgrades and enhancements;
Set standards for procuring network equipment and supporting
configurations;
Implement the cyber security policies and controls development
and architecture evaluation of security solutions and it monitors
alignment with best practices, incident response planning, and;
Manage equipment, service and usage expenses paid to telecom
providers for phone, data circuits, Internet, etc. This includes WAN
costs such as fiber backbone or microwave, whether those WAN
costs are external service provider costs or are provided by internal
resources.
Legal
Handle all matters related to general litigation involving the
corporation;
Perform legal services for securities and corporate financial
transactions, financial reporting and disclosures, business
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Service Provided Description of Services Provided
organizations, mergers, acquisitions and business development,
corporate governance, internal controls and risk management,
insurance, executive compensation;
Manage legal services for commercial and contract law matters for
the corporation, including real estate matters and land use permits;
Serve as board secretary and support corporate governance
functions, board of directors meetings, legal opinion letters, assists
audit and compliance functions, performs and attests internal
controls, and ensures compliance with corporate registration and
regulation;
Retain and manage external counsel to provide legal
representation in specialized areas of law and to manage variable
level legal work;
Legal work supporting the negotiation of water purchase
agreements and other procurement contracts as well as legal work
related to franchise renewals, water rights;
Provide legal advice and representation with regard to intellectual
property matters;
Perform legal services for matters involving environmental law for
the corporation including environmental permitting activities, due
diligence, defense in enforcement actions, compliance advice,
representation in environmental cleanup and environmental
litigation costs;
Provide legal advice, representation and counseling in matters
arising under federal and state water regulatory laws, regulations
and policies as they relate to the Company’s utility related assets
for water and waste water;
Provide risk management services including management of the
insurance and surety bond programs; and,
Manage and administers corporate legal and regulatory
compliance programs, other than Ethics Compliance.
Procurement
Procurement planning and scheduling; RFP, RFQ, RFI creation.
Management of the bidding process which consists of bidder
selection, invitation, bid package preparation and distribution, bid
evaluations, vendor selection, and contract award, including
master agreements.
Corporate
Communications
Media Relations: Research and develop media response,
positioning, and strategy to respond to media inquiries or place
stories in the media. Develop press releases, arrange interviews,
and maintain 24/7 media relations availability. Act as company
spokesperson. Also includes communications resources with
respect to corporate responsibility, etc.
Corporate Awareness Communications or Advertising: General
corporate awareness and brand image purposes, including "issue
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Service Provided Description of Services Provided
advertising". Spend includes agency/vendor fees to create and
execute advertising.
External Informational, Safety, and Educational Communications:
Communications or advertising spend that provides information
and educational messaging on topics such as: billing and payment
options, such as e-billing, budget billing, and direct debit; rate
options; low-income programs, consumer protection and privacy
rights notices; general water efficiency information; public safety,
including "call before you dig" programs; school education
programs; and special educational programs such as
environmental programs.
Product/Service Promotion: Communications or advertising spend
that promotes products or/or services from which the utility will
benefit.
Internal and Intranet Communications: Internal Communications
included Company communications between employees or
departments across all levels, or divisions, of an organization.
Intranet Communications includes posting of content to the internal
intranet, managing intranet user experience, interfacing with IT for
intranet administration, measurement and analysis of intranet
traffic and other data.
External Publication and Communications: Communication
targeted for non-employee audiences (public, media).
Annual Report: Design, production, printing and distribution of the
Annual report, including postage.
Internet Website Content Development and Maintenance:
Development and/or curation of content for all externally facing
company websites.
Social Media Communications: Management and administration of
established corporate social media accounts, such as Facebook,
Twitter, Instagram, and others, and the delivery of content through
those social media channels.
Regulatory Business
Translation of financial data into a State and regulated revenue
requirements, including the preparation of supporting work papers
for rate cases and other regulatory filings;
Internal and external costs for cost of capital and cost of equity
testimony; calculations of formula rates and filings associated with
these calculations;
Oversight and policy guidance on regulatory proceedings;
Management and maintenance of routine State economic
regulatory relationships and contacts;
Management and maintenance of routine regulatory contacts, with
stakeholders;
Monitors issues and advocates positions in federal regulatory
proceedings as they pertain to the Company's businesses;
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Service Provided Description of Services Provided
Rate design and tariff administration activities. This also includes
tariff interpretation activities, marginal cost analyses, and the
pricing and tariff-related aspects of special contracts requiring
regulatory approval;
Participation in technical conferences, monitoring regulatory
activities, and discussing issues with PUC staff; and,
Prepare required State and Federal regulatory reporting for
initiatives including service quality indicator quarterly reports.
Revenue Management The Revenue Management function manages non-revenue water
issues and automatic meter deployment.
Facilities
Manages corporate and shared services facilities as well as certain
other more centrally located facilities. Supports facility remodeling
and renovation efforts.
Business Development
Develop and grow the non-regulated segment, i.e., Environmental
Services;
The costs associated with Business Development are charged to
the non-regulated segment and are not in the M&S fees allocated
to the regulated business units; and,
Manage SUEZ Water’s strategic planning process.
Engineering & Technical
Services
Advises and provide engineering services to assist the operating
companies with planning, operating, maintenance, and
construction functions.
Assist the operating companies in conducting distribution system
surveys, hydraulic analysis, water quality control, system mapping,
charting, and other pertinent statistical analyses.
Provide periodic inspection of company structures including, tanks,
reservoirs, wells, and electrical and mechanical equipment.
Gather all pertinent statistics, reports, cost estimates, studies,
specifications and other data necessary to aid in the construction
of additions or improvements to the sources of supply, treatment
plant, pumping stations, distribution system, and other facilities as
requested by the various operating companies.
Environmental Health
and Safety
Mostly performed by employees embedded in the utility business
units with only two employees providing oversight at M&S.
Customer Care
Provides guidance, training, control and, management reporting for
the Customer Service process;
Standardizes customer service practices throughout the SUEZ
Water regulated business units; and,
Plans for consolidation of operational activities in the future.
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Service Provided Description of Services Provided
Human Resources
The recruitment, screening, and selection of internal and external
candidates;
Establishing relocation programs and management of employee
relocations, including all administration and execution costs of the
relocation program;
Design and administer compensation processes including job
evaluations, annual salary planning, incentive programs, executive
compensation, deferred compensation, long term incentive
programs;
Design, management and implementation of health, prescription,
life insurance, pension and retirement, reimbursement accounts,
employee assistance programs, and other benefits for all
employees;
Manage strategy, negotiations, and contract interpretation. This
includes arbitration resolution, mutual gains bargaining, local
management support on grievances, discipline, adherence to the
contract and training;
Identification, development, and delivery of training programs to
enhance the skills and capabilities of the workforce;
Provide support on Human Resources technology and processes,
technology strategy and solutions, portfolio management,
corporate and ad hoc reporting, data analysis, data integrity and
oversight, and system testing; and, process and release
management;
Succession planning, performance management, career
development, mentoring, executive coaching, career planning &
development, and employee/organizational assessments;
Management and administration of all short and long term disability
programs and FMLA, whether done internally or by a third party;
disability insurance premiums, if any, and the cost of claims for self-
insured programs and insured programs with a deductible; medical
services required by the Company for disability cases, such as
second opinions, consultations, etc.; disability case management
and return to work programs; investigations of short term disability
claims; legal services, whether internal or external, related to
disability cases;
Provide safety training requirements and communication tools,
needs assessments and training program development, and
compliance reporting, including investigation leadership and
support; and,
Labor Relations including contract negotiations and grievance
management.
7. Services Provided by Affiliates Other Than M&S
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In addition to the services provided by the Service Company to its affiliates, services may
on occasion be provided among SNA affiliates. Examples of these services include:
 Emergency response services
 Call center services
 Fleet services
Consistent with the cost allocation principles described above, these services are
provided on a fully-costed basis and are either direct charged to the affiliate receiving the
benefit of the service provided or allocated using an appropriate cost driver.
8. Cost Allocation Methodology
The Company’s approach to cost allocation is as follows:
Direct charge: For those departments performing work related to specific construction
projects, costs are charged directly to the appropriate capital project. Engineering and
Information Technology are the departments to which this most generally applies. In
addition, certain other costs incurred for the benefit of a specific affiliate are charged
directly to that affiliate. Examples include certain legal fees and bank fees.
Segment specific allocation: To the extent practicable, shared services functions are
aligned with the business segments to whom services are provided. For functions
supporting the regulated utility business segment, costs are allocated to the individual
regulated utility affiliates using the three-factor formula described below.
Services benefiting all affiliates: For services provided which benefit all business
segments, costs are allocated based on the three-factor formula described below.1
Three-Factor Formula
The three-factor formula used to allocate costs which are not direct charged is based on
the Massachusetts Formula (MF). The Massachusetts Formula2 consists of Plant,
Revenues, and Labor. However, since there is no authoritative guidance on the specific
definitions of these three components, variations have emerged over time among utilities
using to use the MF. For example, revenues may be defined as top line revenues from
the income statement or as gross margins; plant may be defined as utility plant or as total
assets; and labor may be defined as headcount or as payroll dollars. In all cases, these
variations are sufficiently minor to be considered a Modified Massachusetts Formula.
The specific components of a Modified Massachusetts Formula may vary based on the
individual circumstances and business model of the organization. Based on its
combination of regulated and non-regulated affiliates, an allocator comprised of the

1 The first step in the process is to capitalize that portion of A&G costs associated with the services provided
by M&S. These procedures refer to the allocation of the net remaining balances. Amounts subject to
capitalization are distributed to affiliates each month based on the proportion of direct capital expenditures.
2 It is called the Massachusetts Formula based on the Federal Energy Commission decision in Distrigas of
Massachusetts Corp. (41 FERC ¶ 61,205 (1987))
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following three components best reflects the underlying cost drivers associated with the
circumstances and business model of SNA.
The Company will utilize the following factors, equally weighted:
 Gross Revenue;
 Total Assets, excluding investments in subsidiaries and goodwill; and,
 Payroll.
The three-factor formula used to allocate the M&S costs is determined using the
following process:
Step 1: Calculate the average Revenue, Asset and Payroll for affiliates receiving M&S
services
Separately total the revenue, assets and payroll of all affiliates
SUEZ A $558 $1,669 $906
SUEZ B 2,008 6,312 4,085
SUEZ C 4,428 18,231 9,074
SUEZ D 2,990 10,633 7,754
SUEZ E 4,199 12,550 8,237
SUEZ F (Non Regulated) 3,664 18,776 5,653
SUEZ G (Non-Regulated 1,018 3,131 2,568

Step 2: Determine the percentage of M&S total costs to be allocated to each facility

Company
Revenue
Percent
to Total
(1)
Total
Assets
Percent to
Total
(2)
Payroll
Percent
to Total
(3)
Total %
Average
%
**
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SUEZ D 15.85% 14.91% 20.26% 51.02% 17.01%
SUEZ E 22.26% 17.60% 21.52% 61.38% 20.46%
SUEZ F (Non Regulated) 19.42% 26.33% 14.77% 60.52% 20.17%
SUEZ G (Non-Regulated 5.40% 4.39% 6.71% 16.50% 5.50%
Total 100.00% 100.00% 100.00% 300.00% 100.00%

** This result is the allocation factor for each affiliates share of M&S costs.

Step 3: Allocate M&S O&M Cost to Affiliates

Shared Service: (name of service)

9. Time Reporting Procedures
All employees shall report time to reflect the actual number of productive and non-
productive hours worked. For Engineering, Information Technology and other
employees working on specific projects, time shall be directly charged to those projects.
Total functional area costs, which include employee labor costs, will be allocated using
the three-factor formula to either specific business segments or all affiliates based on the
department to which the employee is assigned and is not based on employee coded time
through the time reporting process.
10. Mid-Year Changes
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If a significant organizational modification occurs in mid-year, allocation pools based on
historical usage statistics will be reviewed and modified at that time. In this situation,
allocations using predetermined rates will be modified as part of the following quarterly
true up process.
On occasion, the Company may acquire an affiliate which continues to self-provide
certain services otherwise provided by the Service Company. In those instances, only
those services actually provided by the Service Company to the affiliate will be reflected
in the cost allocation processes described above.
11. Reporting
On a monthly basis, M&S shall make a report available to each affiliates and/or business
segment for the cost of the services received by service provided. In addition, the Service
Company will make available electronically the capability to drill-down on each element
in the invoice.
12. Distribution
Distribution of the CAM shall be made to all holders of the SNA Policy and Procedures
Manuals.
13. Shared Services Assets
Affiliates to whom M&S provides services may use shared assets related to the services
provided, primarily computer hardware and software. Additionally, certain assets are
utilized for the provision of shared services, for example, leasehold improvements.
Historically, the cost of these assets was not recorded at M&S; instead, a portion of the
fully loaded cost of such assets was recorded on the books of each of the affiliates
utilizing those assets at the time the assets were placed in service.

Beginning December 2015, shared assets that have not yet been allocated to the affiliates
using those assets will remain assets of M&S. In lieu of allocating asset balances among
those affiliates, the cost allocation process will include a component representing the
return on and of the asset, that is, depreciation, a return on the net investment in such
assets (including ADIT) and applicable federal and state income taxes. The allocation of
the return on and of the asset cost will be specific to each asset and costs will be allocated
only to those companies utilizing the services provided by those assets. Depreciation
expense shall be recorded at M&S and allocated based upon the proportion of assets
allocated to each business unit. The return component of the allocation shall be
calculated based upon the net asset balance allocated to each business unit at the last
regulated rate of return authorized by the respective regulatory jurisdiction for the
specific business unit.

APPENDIX A
ORGANIZATION CHARTS
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SUEZ North America Legal Structure Organization Chart

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APPENDIX B
Sample Calculation of the Three-Factor Formula (for 2016)

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UNITED WATER NEW YORK INC.
Comprehensive Review of United Water
Management and Services Fees
April 24, 2015

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CONTENTS
1 EXECUTIVE SUMMARY 4 
1.1 Introduction 4 
1.2 Task 1: Economic Analysis 6 
1.3 Task Two: Internal Controls 9 
1.4 Task Three: Accounting and Internal Processes 12 
1.5 Task Four: Three Factor Methodology 13 
1.6 Task Five: Cost Allocation Manual 15 
2 SERVICE COMPANY OVERVIEW 18 
2.1 Corporate Shared Services Overview 18 
2.2 United Water Organization Structure 19 
2.3 Services Included In Our Report 20 
2.4 Determination of UW-NY Shared Services Costs for Benchmarking 21 
2.5 Costs Not Reviewed in this Report 22 
3 BENCHMARKING OVERVIEW 23 
3.1 Shared Services Benchmarking Methodology 23 
3.2 Normalization 23 
3.3 Benchmarking Results 24 
3.4 Analysis of Benchmarking Results 26 
3.5 Schedule 28 
4 TASK ONE: ECONOMIC ANALYSIS 29 
4.1 Total Cost of M&S Shared Services 29 
4.2 Shared Services Cost to UW-NY 29 
4.3 Need and Benefit of these Services to Ratepayers 30 
4.4 Third Party Market Information 30 
4.5 Financial Planning Services 32 
4.6 Accounting and Tax Services 38 
4.7 Treasury Services 42 
4.8 Internal Audit Services 45 
4.9 Procurement Services 48 
4.10 Legal Services 50 
4.11 Information Technology 53 
4.12 Human Resource Services 56 
4.13 Corporate Communication Services 60 
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4.14 Regulatory Business Services 63 
5 INTERNAL CONTROLS 66 
5.1 Objective 66 
5.2 Approach 66 
5.3 Background 67 
5.4 Findings 71 
5.5 Recommendations 74 
6 ACCOUNTING AND INTERNAL PROCESSES 75 
6.1 Objective 75 
6.2 Approach 75 
6.3 Background 76 
6.4 Results of Testing 77 
6.5 Findings 89 
6.6 Recommendations 91 
7 THREE FACTOR METHODOLOGY 93 
7.1 Background and Objective 93 
7.2 Approach 94 
7.3 Findings 98 
7.4 Recommendations 99 
8 COST ALLOCATION MANUAL 101 
8.1 Background and Objective 101 
8.2 Approach 102 
8.3 Findings 103 
8.4 Recommendations 107 
 APPENDIX A – ECONOMIC ANALYSIS RESULTS FOR M&S SERVICES (TOTAL COST) 108 A
 Scope of the Review 108 A.1
 Approach 108 A.2
 Determination of Total M&S Costs for Benchmarking 109 A.3
 Services Included 111 A.4
 Mapping Departments to Shared Services 111 A.5
 Total Cost of M&S Services 113 A.6
 Costs Not Reviewed 114 A.7
 Cost of M&S Shared Services - Summary 115 A.8
 Financial Planning Services 116 A.9
 Accounting and Tax Services 121 A.10
 Treasury Services 125 A.11
 Internal Audit Services 128 A.12
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 Procurement Services 131 A.13
 Legal Services 133 A.14
 Information Technology 136 A.15
 Human Resource Services 139 A.16
 Corporate Communication Services 143 A.17
 Regulatory Business Services 145 A.18
 M&S ALLOCATIONS PROCESSING CONTROLS FLOWCHART 147 B
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1.1 Introduction
Pursuant to NYPSC Order dated June 26, 2014 in Case 13‐W‐0295, Order No. 6: 
“The Company is directed to conduct a comprehensive examination of its 
management practices…which examination shall include an audit of the fees it is 
charged by United Water Management & Services Company Inc. The Company 
shall coordinate the scope of the examination with the staff of the Department of 
Public Service…to ensure a thorough review of the issues identified in this order.”  
The comprehensive review is intended to address the issues related to United Water Management & 
Services, Inc. (M&S) identified in the Recommended Decision:  
 Improper charges and misallocation of expenses;  
 Equitability of continued application of the three factor methodology to regulated affiliates; and, 
 A cost/benefit analysis that compares M&S services to alternative outside services. 
In addition, the Commission required United Water – New York (UW‐NY) to file a comprehensive cost 
allocation manual governing its transactions with its affiliates under the M&S Agreement. More broadly, 
the Commission expressed its concern regarding the extent to which UW‐NY is exercising diligent 
management oversight over the UW‐NY operations and pursuing all reasonable cost control strategies to 
minimize rates.  
In compliance with the above order, M&S subsequently issued a Request for Qualifications (RFQ) in 
December 2014 for a “Comprehensive Review of United Water Management and Services to United 
Water New York, Inc.”   This RFQ was subsequently revised and re‐issued on January 13, 2015.   PA  
Consulting Group was selected by the Company to perform the Review.  This report presents the results 
of the comprehensive review completed by PA Consulting Group (PA). 
1.1.1 Company Overview
United Water, Inc. originally founded as Hackensack Water Company in 1869, is an American water 
service company headquartered in Harrington Park, New Jersey. Currently, United Water owns and 
operates 16 water and wastewater utilities, and operates 90 municipal water and waste water systems 
through public‐private partnerships and contract agreements. The company has over 2,300 employees. 
In 2014, United Water generated $750 million in revenue, and managed $2.6 billion in total utility plant. 
United Water Management and Services, Inc. is a wholly owned subsidiary of United Water, Inc. (UW), 
which is a wholly owned subsidiary of Suez North America, Inc. (SENA). 
1 EXECUTIVE SUMMARY
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Based on the Agreement between M&S and UW‐NY provides administrative, engineering, legal, 
operations, accounting, finance, human resources, purchasing, insurance, data processing, customer 
service, billing, public relations, planning and ratemaking services, collectively known as "Shared 
Services" to the operating subsidiaries of UW, including, United Water, New Jersey (UW‐NJ), United 
Water, New York (UW‐NY), United Water, New Rochelle/Westchester (UW‐WC), United Water Mid‐
Atlantic (UWMA), United Waterworks (UW‐W), and United Water Environmental Services (UW‐ES). UW‐
NY is a regulated water utility and a subsidiary of UW‐NJ that consists of 113 employees, approximately 
74,000 customers and annual revenues of about $81.5 million.  
A partial legal entity organization chart showing the relevant entities is below.  

1.1.2 United Water Organization Structure
The following charts represent the executive organization structure of UW and the regulated business 
segment: 

Suez Environment 
North America, 
Inc.
United Water, 
Inc.
United Water 
Resources
United Water 
New Jersey
United Water 
New York
United Water 
Mid‐Atlantic United Waterworks
United Water
Westchester / 
New Rochelle 
United Water 
M&S
United Water 
Environmental 
Services
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M&S provides services through the organizations represented by the green‐shaded boxes.1 
The remainder of this chapter presents a high level summary of the objectives, approach, findings and 
recommendations associated with each of the five tasks described in the RFQ.   More detailed 
discussions are provided in the individual chapters by Task area. 
1.2 Task 1: Economic Analysis
1.2.1 Objectives
 Identify the current services provided by M&S at the department level;  
 Evaluate the effectiveness and efficiency of the needed services; 
 Evaluate the benefit of such services to the customers of the UW‐NY utility; 
 Examine and benchmark the most recent cost of the services the UW‐NY utility receives 
from M&S; 

1 UW-NY is a wholly owned subsidiary of UW-NJ.
Chief Executive Officer
SENA & United Water
Director, Internal Audit
Executive Vice President, 
Comunications & 
Operations Support
Sr. Vice President
Corporate Development
Sr. Vice President
Human Resources
Sr. Vice President 
Chief Financial Officer
Sr. Vice President
General Counsel
President
Regulated
President 
Environmental Services
President
Regulated
Vice President & General 
Manager
New Jersey Division
Senior Director & General 
Manager 
New York Division
Vice President & General 
Manager
Mid Atlantic Division
Vice President & General 
Manager
Idaho/Arkansas Division
Vice President and CFO
Director
Human Resources
Vice President
Customer Service
Sr. Director
Revenue Management & NJ 
Customer Ops.
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 Determine if the provisions of these services are the most cost effective alternative;  
 Perform a cost benefit analysis comparing M&S services to alternative outside sources of 
equivalent services; and, 
 Recommend, if needed, sufficient and proper controls so that charges for services under 
the agreement result in reasonable costs and are the best alternative for provision of the 
service such that the UW‐NY utility can independently compare the cost of obtaining the 
service through the M&S Company to that of non‐related parties or having the utility 
performing the service itself. 
1.2.2 Approach
The focus of this comprehensive review is on the fees UW‐NY is charged by M&S. However, to assess the 
effectiveness and efficiency of the services provided to UW‐NY, PA believes the review needs to also 
include an assessment of the service costs in the aggregate (or M&S level). An analysis at this level avoids 
issues associated with differing capitalization and cost allocation practices among peer panel companies 
which impact service costs at the individual operating company (e.g., UW‐NY) level.   
To assess the effectiveness and efficiency of the services provided by M&S, PA compared the total cost 
of each of the ten services (described below) to the normalized peer panel median value of these same 
services for the companies participating in PA’s Corporate and Shared Services benchmarking study.  Our 
specific approach to completing this assessment, as well as the results of this assessment, is provided in 
Appendix A to this report.   
To assess costs charged to UW‐NY, we started by identifying costs on the books of UW‐NY for 2014 for 
each of the ten services and then compared those costs to the normalized peer panel median value for 
these same services.  
To accomplish this cost comparison, and the other requirements of the economic analysis task described 
above, PA performed the following for each service provided by M&S to the UW‐NY utility:  
 Obtained copies of the monthly M&S invoices for services billed to UW‐NY in 2014; 
 Obtained financial reports detailing costs direct charged to UW‐NY related to the Shared 
Services;   
 Provided the Company with an initial data request (IDR), including a request for cost data for 
approximately 190 sub‐processes typically included in Shared Services provided to affiliate 
companies; 
 Reviewed responses to IDR and submitted follow‐up request to M&S; 
 Met with M&S and UW‐NY employees for each Shared Service; and,  
 Completed the benchmarking model and analysed results. 
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1.2.3 Key Findings
1. The total cost of the ten services provided to UW‐NY is well below the normalized peer‐panel 
median in aggregate.2 
Shown below are the total 2014 costs charged to UW‐NY for the ten services provided by M&S and 
the normalized utility peer panel median cost for these same services.   
Service
Peer Panel
Normalized
Median
Total M&S
Charges to
UW-NY Difference
($000)
($000) ($000)
Financial Planning $348 $705 $357
Accounting 301 1,005 704
Treasury 356 323 (33)
Internal Audit 136 162 26
Information Technology 4,281 2,208 (2,073)
Human Resources 572 397 (175)
Legal 589 473 (116)
Procurement 346 130 (216)
Corporate Communications 458 458 1
Regulatory Business 287 311 26
Total $ 7,671 $ 6,172 ($ 1,499)

 The total cost of these services was $1.5M or 19.5% below the normalized peer panel median 
cost for these same ten services. 
 Costs to UW‐NY  are significantly below the normalized peer‐panel median cost for Information 
Technology Services.  
o United Water is currently in the process of upgrading its version of PeopleSoft ERP and 
adding a front end business planning and budgeting tool (Hyperion). Similar investments 
in these technology enablers have typically already been made by most of the peer panel 
companies.   
o Spending on Information Technology often favorably impacts effectiveness and 
efficiency in other services provided. 
o M&S IT in total spent $1.980M for outside services in 2014. This represents only 10.0% 
of the 2014 UW IT spend, while members of our peer panel average 21.3% of total spend 
to on outside services. 

2 For purposes of this study, references to services provided to UW-NY include the cost of services provided by M&S and allocated
(or direct charged) to UW-NY, the cost of allocated “corporate assumptions,” the cost of certain services provided by outside service
providers, and the cost of employees embedded in utility operations.
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 Costs to UW‐NY are significantly above the normalized peer‐panel median cost for both Financial 
Planning and Accounting Services ($357K and $704K respectively) which may be attributed to: 
o Suez Environment North America (SENA) has a complex organization structure.  SENA  
operates in approximately twenty States as well as in Canada.  The other members of the 
peer panel will have various numbers of affiliates or business unit but SENA is well above 
the number of business units supported by the panel members. 
o During the period of analysis, financial systems utilized by these Services did not 
adequately address the complexity of the SENA structure, requiring an above average 
level of manual intervention.  
 In addition to a planned NY Operational Revenue Cycle Audit, Internal Audit had an unplanned 
engagement in UW‐NY, the cost of which was directly charged to UW‐NY.   This contributed to 
the higher than the peer panel median cost for Internal Audit to UW‐NY in 2014. 
1.2.4 Recommendations
1. The Company should develop both a short‐term and long‐term strategic plan for Information 
Technology toward modernizing all operational and financial systems used by M&S to provide 
Shared Services. 
a. IT Services play a critical role in implementing systems that support the growth of the utility and 
enable efficient management of the complex organizational structure. 
b. It appears that M&S is somewhat behind in developing IT systems and services to address 
financial system needs. We believe this has contributed to the higher than median cost for both 
Financial Planning and Accounting Services. 
c. The use of outside services is a common method for modernizing or upgrading IT system. Spend 
for IT outside services is less than half the average for our normalized peer panel. 
2. Consider broader participation in utility benchmarking programs. 
3. Consider completing data gathering and analysis using the PA Corporate and Shared Services 
benchmarking study to assess performance at the subprocess level.   This will provide a more 
informed analysis of the variances from the peer panel median used in this review.  

1.3 Task Two: Internal Controls
1.3.1 Objective
The objective of the task is to review the current cost structures, processes and controls and evaluate 
the strength of those processes and controls to assess the possibility of improper charges and / or 
misallocation of expenses.
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1.3.2 Approach
PA assessed the effectiveness of the system of internal controls by reviewing documentation of the 
systems of internal controls related to the M&S billing process, interviewing key individuals with 
responsibility for designing the system of internal controls, testing the system of internal controls, and 
executing M&S billing processes and the related systems of internal controls.   
In addition, we reviewed governance practices and related controls including planning, budgeting, 
reporting and monitoring. 
Finally, the results of our assessment were informed by the results of the detailed review we completed 
as part of the Accounting and Internal Processes task. 
1.3.3 Key Findings
1. Responsibility for establishing appropriate M&S controlled budgets as well as the appropriate 
assignment of those costs to individual regulated and non‐regulated business units resides at 
“Corporate” (i.e., at M&S). 
2. The complexity of the process results in a lack of traceability of allocated costs, from the original 
M&S charge to the amount billed to an individual business unit, implying a lack of transparency. 
This limits the effectiveness of the business unit finance department review of the monthly M&S 
bill. 
3. The M&S Financial Planning department has primary responsibility for M&S (referred to internal as 
Sales, General & Administrative, or SG&A) variances. Individual M&S department heads do not 
formally submit explanations for actual and projected variances and do not have formal periodic 
meetings to discuss operating results.  Variances are reviewed primarily by the CFO in the review of 
the SG&A cost line item and by the individual Executive Management Team (EMT) members. 
4. The monthly M&S allocations process is well‐defined and controlled, although the efficiency of the 
process could be improved, if simplified. 
5. The Company uses controls embedded in its PeopleSoft financial system to mitigate the risk that 
M&S departmental costs are allocated to the incorrect business units. 
6. The system of internal controls follows the M&S affiliate agreement which governs the Company’s 
allocation practices. These agreements do not provide the flexibility to update allocation practices 
without refiling the agreements with the appropriate state regulatory agencies. Consequently, 
allocation practices have not been routinely updated to reflect changes in the Company’s business 
environment.  
7. Some practices exist to ensure the pricing of services provided is at or below market, but 
improvements can be made. 
8. While the system of internal controls is documented and assessed through COVAL, we did not see 
evidence that the M&S allocation process controls were specifically included.   Internal Audit 
indicated they did not perform an audit of the M&S fee allocation process in 2014. The last internal 
audit of M&S allocation process controls occurred in 2011.   
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9. Employee time reports are not subject to supervisory approval but compensating controls are 
adequate.  
10. Time reporting guidance provides suggested percentages for time charged to Capex (using the 
“Overhead” project).  These percentages are based on a “high level review.”  
11. M&S department heads generally have budgetary control over costs they are responsible for which 
do not include certain costs such as pension and benefit costs. . 
• Certain costs are budgeted at the M&S department level (and some M&S departments have 
budgets specifically for certain business units activities); 
• Some related  costs (e.g., certain legal fees) are budgeted directly by the Business Units; and, 
• Some costs are allocated or assigned directly to the Business Units (i.e., Corporate 
Assumptions) with budgetary control at the EMT (or other appropriate senior manager) level 
for the aggregate level of spend. 
12. Spend for capital projects is controlled by the project manager at the project level, and is monitored 
and reviewed by the Corporate Capital Planning function and the EMT (i.e., subject to control 
processes outside of the departmental budgetary control processes).  
1.3.4 Recommendations
1. Change the M&S allocation process to improve the traceability and auditability of costs down to the 
BU level; this will, in turn, improve the perceived transparency of the allocation process. 
2. Simplify the allocation process, which is governed by the practices delineated in the current M&S 
agreement, by eliminating the allocation of certain costs to the department level. For example, IT 
and space costs are allocated to individual departments. While the theory behind doing this is 
certainly valid, it may make more sense to consolidate these costs and allocate them in total.   
3. Simplify the allocation process by excluding costs allocated to M&S departments based on the 
number of M&S employees, workstations, etc. from the allocation basis and instead include these 
costs in the amounts directly charged to the regulated and non‐regulated segments.  
4. Consider fully allocating all actual M&S Opex each month rather than using forecasted spend (which 
is within the current M&S agreement) to allocate costs to improve traceability and auditability, 
which will in turn improve the perceived transparency of the allocation process.  
5. Ensure that Internal Audit reviews the M&S fee allocation process on a periodic basis.  
6. Include a section in the Cost Allocation Manual which describes control processes around costs 
allocated or charged through the Corporate Assumptions process.   
7. Perform a more detailed study to support the capitalization of A&G costs.    

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1.4 Task Three: Accounting and Internal Processes
1.4.1 Objective
The objective of this task was to ensure the amounts billed by M&S represent legitimate charges for 
services provided to the UW‐NY utility consistent with the Service Agreement and draft Cost Allocation 
Manual (CAM) and are properly recorded on the books of the UW‐NY utility consistent with the Uniform 
System of Accounts (USoA) approved by the New York Public Service Commission. 
1.4.2 Approach
PA assessed the effectiveness and efficiency of the accounting and internal processes associated with 
M&S billing to affiliates by performing the following: 
 Tested the mechanics of the allocation process for accuracy;  
 Reviewed a sample of amounts billed to the UW‐NY utility to ensure the appropriateness of 
labor and non‐labor charges; and, 
 Reviewed the calculation of the allocation factors for accuracy and agreement with appropriate 
sources and for consistency with the Agreements. 
1.4.3 Key Findings
1. The results of transaction testing found that the mechanics of the allocation process are working as 
designed.  
2. The testing of the allocation factors themselves found some errors and inconsistencies, in part 
attributable to differences between the operations of the regulated and non–regulated segments 
and in part due to a lack of standardization and automation which likely resulted in fewer costs being 
allocated to UW‐NY in 2014. 
3. The allocation process is very complex, which in turn results in a lack of traceability of the costs billed 
to the BU level. 
4. Amounts are charged to the appropriate accounts consistent with the USoA adopted by the New 
York Public Service Commission.  
1.4.4 Recommendations
1. Improve the standardization and documentation of data sources used to develop the allocation 
factors to reduce the risk of mistakes associated with communication. 
2. Establish detailed definitions for allocation factors and a standard method of documenting support 
for each allocation factor. 
3. Align allocation factors to regulatory filings to reduce communication issues and increase traceability 
and perceived transparency. 
4. Allocation factors should be comparable across multiple business types, and not dependent on the 
composition of the business unit’s services. 
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5. Set up a standard review of department level time coding to ensure that M&S employees are billing 
in congruence with work performed. 

1.5 Task Four: Three Factor Methodology
1.5.1 Objectives
There was a significant discussion in the Order and testimony regarding the Company’s three factor 
methodology (commonly referred to as a “general allocator”).  Specifically, Commission Staff questioned 
whether the use of “Number of Customers” results in an over‐allocation of costs to the regulated New 
York utilities as a result of under‐allocating costs to certain non‐regulated businesses.  The June 2014 
Order requires this study to address the appropriateness of the continued application of the current 
three factor methodology to regulated affiliates, including an assessment of the impact of any mis‐
allocation for the last 3 years. 
The objective of this task is to address the equitability of the continued application of the current three 
factor methodology to regulated affiliates, over the last 3 years. 
1.5.2 Approach
To assess the appropriateness of the current Three Factor Methodology, PA performed the following: 
 Compared the methodology to common practices in the utility industry for use of a general 
allocator; 
 Assessed whether the use of the three factor methodology to allocate specific corporate and 
shared services costs is consistent with common practices in the utility industry; and, 
 Assessed whether the components are sufficiently cost causative given the nature of the 
services provided and the nature of the affiliates to whom these services are provided 
1.5.3 Key Findings
1. The Agreement Between United Water Management & Services Inc. and United Water New York 
Inc., which specifies the use of the three factor methodology as currently used, is dated October 20, 
1995.   The  Agreement specifies that this methodology be used to allocate Administrative, 
Purchasing, Insurance and General Services.  
2. M&S’s use of a three factor methodology (or general allocator) to allocate the cost of the following 
services is reasonable when coupled with the direct charging of costs benefiting specific business 
units: 
 Executive‐level services; that is, the CEO and office of the COO; 
 Legal (i.e., for legal services which cannot be direct charged to an affiliate); 
 Business Development (no business development costs were allocated to the regulated 
segment in 2014 as a policy decision); and, 
 Procurement. 
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3. The individual components used in M&S’s three factor methodology (number of employees, number 
of customers and O&M expenses) do not best reflect the underlying cost drivers as compared to 
commonly accepted industry practices and the Company’s current portfolio of regulated and non‐
regulated businesses. 
 One of the three components should reflect investment requirements such as Gross Plant, 
Net Plant, or Capitalization. 
 Number of customers is not reflective of cost causation for non‐regulated contracts in which 
UW affiliates do not provide meter reading and/or billing services. This represents a majority 
of the individual contracts.  A reasonable alternative would be “revenues” or “gross margin.” 
 Commonly accepted practices suggest that either “payroll,” “number of employees” or 
“operating expenses” would be a reasonable third component, but the general allocator 
should not use two of the three. 
4. It is a common practice in the North American utility industry to use the general allocator to 
apportion costs among affiliates for functions providing “governance, general corporate support 
services or business sustainability” services.   
5. Strategic planning is performed within the Commercial Development function (also referred to as 
Business Development).  The cost of strategic planning is not currently allocated to the regulated 
affiliates. 
6. While UW does not currently allocate the Suez Environmental management fee to the regulated and 
non‐regulated segments, it is likely that some corporate services represented by this management 
fee are commonly allocated in the utility industry using a general allocator.  
1.5.4 Recommendations
1. The components of M&S’s current three factor methodology should be changed to better reflect 
common utility industry practices for the use of general allocators as discussed above. 
2. To the extent possible, the components should reflect readily available data and match public 
documents such as the Annual Reports filed with State utility regulatory commissions.    
3. The three factor methodology should also be comprised of components that better reflect cost 
drivers of the Company’s current business model.  For example, the Company should consider the 
following; however, this list is not intended to represent all possible options.  
Current Number of Employees Number of Customers O&M Expenses 
Proposed  
(select one from each 
column) 
 Operating expenses 
 # of Employees 
 Payroll Dollars 
 Operating Revenues 
 Gross Margin 
 Gross Plant 
 Net Plant 
 Net Assets 
 Total Capitalization 
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4. There are a number of M&S functional areas where replacing the current allocation factor with a 
general allocator, utilizing the components suggested in 3 above, would both simplify the overall 
process as well as improve the cost causality of the allocation basis.   
5. UWM&S should consider apportioning strategic planning services to both regulated and non‐
regulated business units using a general allocator.   Strategic  Planning costs are not currently 
allocated to the regulated business segment.
1.6 Task Five: Cost Allocation Manual
1.6.1 Objectives
The objective of this task is to examine the draft M&S Cost Allocation Manual (CAM) and provide 
recommended changes where appropriate consistent with generally accepted industry practices.
1.6.2 Approach
To accomplish this objective, PA evaluated the draft CAM and compared it to common practices in the 
United States utility industry for the following:   
 Comprehensiveness of the scope of the CAM; 
 Completeness of the components of the CAM; 
 Effectiveness in providing guidance for cost allocations, both labor and non‐labor; and, 
 Appropriateness of specific allocation factors used.  
1.6.3 Key Findings
1. The CAM is an incomplete draft document and does not have the same weight as a formal corporate 
policy. As a result, the document is not generally acknowledged as a source of guidance to 
employees.   
2. Employees are not periodically trained on the policies and practices included in the CAM, and it is 
likely that M&S employees are neither familiar with the CAM in its draft form nor turn to it for 
guidance. 
3. The framework of the draft CAM is reasonably consistent with industry practices. However, there are 
many subcomponents of a cost allocation manual which are not included in the draft CAM.   
4. Specific cost allocation factors are at the departmental level rather than at the “service” level.  
 For example, for Human Resource department, all costs are allocated based on the Number 
of Employees.  Defining an HR cost pool to capture costs of services related specifically to the 
bargaining unit workforce (e.g., labor contract negotiations and grievance handling) and 
allocating these costs based on the Number of Union Employees may be more appropriate, 
especially given the non‐union composition of the non‐regulated segment workforce.  
 Certain non‐labor expenses such as ADP‐provided payroll services are also allocated based on 
Number of Employees through the Corporate Assumptions process.  In most organizations, 
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the complexity of a union payroll is significantly greater than a non‐union payroll due to pay 
differentials, premiums, deductions, etc.  In addition, union employees are paid on a weekly 
basis rather than a bi‐weekly basis which is typical for the rest of the Company. 
 Strategic planning services are embedded in Business Development costs which are not 
allocated to the regulated business segment.   
5. Some non‐labor costs associated with services provided by M&S employees are directly charged to 
business units rather than go through the M&S billing process. Examples include: 
 Out of pocket expenses related to internal audits and regulatory services 
 Certain legal fees 
6. The use of “Capitalization” as the allocation factor for functions such as IT (excluding CC&B‐related 
costs and many non‐labor costs) and Finance and Accounting (charged to BU 305) resulted in 
approximately 98% of these costs being allocated to the regulated segment in 2014.  This result may 
not be fully reflective of the underlying cost drivers.  For these functions, the use of the general 
allocator may result in allocations more reflective of underlying cost drivers. 
7. The following costs are not allocated to the regulated and non‐regulated business units, including 
UW‐NY: 
 Non‐regulated segment related memberships and sponsorships: 
 Suez management fee: 
 Certain consulting costs (included lobbying expenditures); 
 Certain external audit fees; 
 Certain legal expenses; 
 Corporate charitable contributions; and,  
 Certain business development costs (e.g., costs associated with the acquisition of the 
Long Island properties were direct charged to Corporate in 2014). 
8. Company management has indicated that it has started a process to update its cost allocation 
practices and the related affiliate agreements. This update is being coordinated with the upgrade to 
the PeopleSoft ERP which is currently underway. 
1.6.4 Recommendations
1. The draft CAM should be updated to address the items described in the above findings and made an 
official Company policy document.  
2. Revise the set of allocation factors currently used, including the three factor methodology described 
in the previous chapter, to better reflect underlying cost drivers, improve consistency, and improve 
efficiency.  This includes the expanded use of the three factor formula and the tailored use of a 
limited number of “service” based allocators. 
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 As an example, the allocation process for Human Resources and Payroll services could be 
tailored to better reflect the underlying differences in cost drivers discussed above 
between union and non‐union workforces. 
 This could be accomplished by allocating payroll costs based on the number of 
paychecks issued per month.  For Human Resources, an additional cost pool could be 
established to accumulate costs uniquely driven by bargaining unit issues (grievances, 
contract negotiations, etc.); these costs would then be allocated to business units based 
on the number of represented employees. 
 The change recommended here, while not a process simplification, is consistent with the 
general nature of our recommendations in that it is more reflective of the Company’s 
current business model while still being based on readily available allocation factor data. 
3. Develop policies and procedures to ensure that new hires and employee changes resulting from 
internal transfers and departmental reorganizations are trained on time reporting and cost 
allocation practices, including the direct charging of time and expenses when appropriate. 
4. Continue the processes currently underway to update cost allocation practices and affiliate 
agreements consistent with the recommendations include in this report.  

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2.1 Corporate Shared Services Overview
As the utility industry has worked to realize the benefits of specialization, scale, and scope in the context 
of industry specific issues, one successful approach for delivering these benefits has been the shared 
services model.   
In this model, the parent corporation or an affiliated Service Company is set up to provide a common 
suite of services to several utility service provider affiliates.  This enables significant specialization and 
provides the scale to enable investment in sophisticated information systems to support all processes. 
Often, corporate acquisitions of additional utility service providers result in an increasing ability to share 
the costs of these specialized services over a greater base.  This is referred to as “economies of scale”. 
Given the larger service volume delivered through such shared service models, selective sourcing to 
third parties may also be enabled, as the volume of work in specific areas may become large enough to 
be economically attractive for third party service providers.  Thus, the shared service model has the 
potential to be an enabler of further sophisticated third party sourcing, as it provides the aggregation of 
volume necessary to achieve attractive pricing.  PC help desk services are an example of this, where 
support for a hundred PC users is not especially attractive, while support for a thousand or more PC 
users is much more attractive to a service provider.  
The consolidation of electric, gas, water and telecommunications industries have led to the structural 
changes that created holding companies, service companies and shared service organizations. All of this 
helps to reduce costs, provide better service, and standardize practices and procedures. 
There is little argument regarding the benefits of centralizing functions and providing them on a shared 
basis.   The regulatory scrutiny, therefore, has focused primarily on the overall level of cost, the 
assignment of those costs to specific utility franchises and the extent to which a utility has explored 
opportunities to further reduce these costs. 
There are two basic structures that can be used for the provision of corporate shared services.  The first 
is the formation of a stand‐alone “Service Company” where all services for the affiliates are performed.  
All personnel would be employees of the Service Company (M&S in this case) and costs are part of the 
Service Company budget and either directly charged or allocated to the affiliates utilizing appropriate 
cost allocation methodology.   M&S uses this approach for Shared Services such as Information 
Technology, Internal Audit, Treasury and Procurement. 
The second option is a “matrix” style of structure, where some services are provided to the affiliates by 
employees centralized at the Service Company (M&S in this case), while other services or portions are 
provided by employees of the business unit (UW‐NY in this case).  In this model, the utility personnel 
typically only perform services for their utility and as such all of their costs are part of the utility’s 
operating budget, eliminating the need for cost assignment through either direct charging or allocation.  
2 SERVICE COMPANY OVERVIEW
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We refer to these as “embedded employees.”  M&S  uses this approach for Shared Services such as 
Financial Planning, Human Resources and Corporate Communications. 
For example, the Director of Finance (New York), who reports to the UW‐NY General Manager, supports 
both UW‐NY and UW‐W, with his costs apportioned equally between the two operating units. However, 
he performs services solely in support of the Shared Service ‐ Financial Planning Services.  
Also, in this structure, some companies choose to provide leadership and direction for these utility 
employees through a small leadership team at the Service Company that also oversees the analogous 
function(s) at other affiliated utilities.  With this approach, the costs for this typically small leadership 
team are directly charged or allocated to the utilities they support.  An example of this at M&S is for 
services such as External Affairs and Environmental, Health & Safety.  
2.2 United Water Organization Structure
The following charts represent the organization structure of UW and the regulated business segment: 

Suez Environment 
North America, Inc.
United Water, Inc.
United Water 
Resources
United Water 
New Jersey
United Water 
New York
United Water 
Mid‐Atlantic United Waterworks
United Water
Westchester / 
New Rochelle 
United Water M&S
United Water 
Environmental 
Services
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M&S provides services through the organizations represented by the green‐shaded boxes.3 
2.3 Services Included In Our Report
For the purposes of our Review, we selected Shared Services categories that are typical of Shared 
Services Companies and are aligned with the data included in our peer panel data.  These are: 
1. Financial Planning, including: 
a. Corporate Strategy 
b. Financial Planning 
c. Budgeting & Analysis 
d. Management Reporting 
e. Internal Control & Enterprise Risk Management 
2. Accounting, including: 
a. General Accounting 
b. Accounting Policy 
c. Taxes 
d. External Reporting    
3. Treasury, including: 
a. Cash Management 

3 UW-NY is a wholly owned subsidiary of UW-NJ.
Chief Executive Officer
SENA & United Water
Director, Internal Audit
Executive Vice President, 
Comunications & 
Operations Support
Sr. Vice President
Corporate Development
Sr. Vice President
Human Resources
Sr. Vice President 
Chief Financial Officer
Sr. Vice President
General Counsel
President
Regulated
President 
Environmental Services
President
Regulated
Vice President & General 
Manager
New Jersey Division
Senior Director & General 
Manager 
New York Division
Vice President & General 
Manager
Mid Atlantic Division
Vice President & General 
Manager
Idaho/Arkansas Division
Vice President and CFO
Director
Human Resources
Vice President
Customer Service
Sr. Director
Revenue Management & 
NJ Customer Ops.
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b. Corporate Finance 
c.  Accounts Payable 
4. Internal Audit 
5. Procurement 
6. Legal 
7. Information Technology 
8. Human Resources, including: 
a. Payroll 
9. Corporate Communications, including: 
a. Media Relations 
b. Stakeholder Communications 
c. Employee Communications 
10. Regulatory Business 
The next step was to develop the costs of each of these ten Shared Services for UW‐NY.  The Economic 
Analysis Chapter of this Report is organized around these ten Shared Services.  
2.4 Determination of UW-NY Shared Services Costs for
Benchmarking
In order to meet the Commissions requirement to “…examine and benchmark the most recent cost of the 
services UW‐NY utilities receive from M&S”, it was necessary to determine the total costs of each of the 
Shared Services provided by M&S to UW‐NY.   
This was accomplished by performing the following. 
M&S Billing
We obtained copies of the monthly invoices for services billed by M&S to UW‐NY in 2014.  The costs 
included in the invoices was compiled and mapped to the ten service categories identified above as 
appropriate.  To these amounts, we added back a portion of costs representing M&S departmental costs 
which had been capitalized (the “A&G Capitalized” amounts) and not billed through the M&S invoicing 
process to ensure comparability with peer panel data.4 
Treatment of Embedded and Direct Costs
We identified the cost of both employees embedded in UW‐NY and well as costs direct charged to UW‐
NY that relate to the ten services benchmarked.  In some instances, cost were direct charged to UW‐NY 
through the corporate assumptions allocation process,5 in other cases costs were direct charged as 
having exclusively benefited UW‐NY (for example, certain legal expenses and out‐of‐pocket expenses of 
M&S departments incurred while providing services exclusively to UW‐NY). 

4 Description of PA benchmarking methodology and use of a peer panel is discussed in Chapter 3 below.
5 Corporate Assumptions are discussed below in Chapter 5.
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Treatment of Capital Costs
For benchmarking purposes, PA includes capital costs at the regular run rate.  Special projects, large one‐
time investments, and large‐scale upgrades are excluded to the extent they result in costs substantially 
above the process' normal rate of spend.  Regular  run rate capital costs include labor and non‐labor 
expenses.     A portion of these capital costs representing UW‐NY overall share of M&S costs were 
included in UW‐NY costs to ensure consistency with the benchmarking panel.   

2.5 Costs Not Reviewed in this Report
Certain M&S Department costs are not reflected in the cost of the ten shared services benchmarked.  
These include the following departments: 
 Office of the CEO;  
 Office of the COO;  
 Customer Care;  
 Environmental Health and Safety; 
 Engineering & Technical Services;  
 Business Development; 
 Revenue Management; and,  
 Facilities. 
These functions represent approximately 30 percent of total M&S departmental costs.6   This  is 
consistent with other corporate and shared services benchmarking studies we have performed, in which 
approximately 70 percent of total service company costs are typically benchmarked.  
The reasons for excluding these functions from the current study include: lack of comparable peer panel 
data, costs are not allocated to the regulated segment including UW‐NY, and immateriality. 
In the following Chapter, we present the results of our Benchmarking Analysis for UW‐NY.  

66 Or 34 percent if including Business Development (BD); we excluded BD from the percent of total as no BD costs are allocated to
the regulated segment.
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3.1 Shared Services Benchmarking Methodology
To help analyze the costs for M&S’s Corporate and Shared Services7 charged to UW‐NY, we compared 
the actual costs charged to UW‐NY in 2014 to those in our panel of North American utilities.   
This panel includes, in addition to UW‐NY, 14 utilities8 representing a range of size and operating 
environments, for a total of 15 panel members.  For 14 of the panel utilities, the available cost data is for 
calendar year 2013.  To compare this data with UW‐NY’s 2014 cost data, we inflated the 2013 costs by 
1.6%.9    
For some Services, certain utilities are not included in the panel due to lack of data or anomalies in their 
structure.   For example, one member of the panel is excluded from all Services except Information 
Technology since we only have data for IT from that panel member. 
3.2 Normalization
The total, or absolute, cost of Shared Services for any company is clearly directly related to the size of 
the company.   However, the relative cost of Shared Services tends to decrease as a company’s size 
increases, consistent with the economies of scale discussed above.  Since no two companies are exactly 
the same size, to compare costs across a group of companies, the absolute level of cost needs to be 
normalized to adjust for size.  
To normalize for size across our data set of 14 utilities and UW‐NY, we have used three equally weighted 
measures of size – gross margin, net assets, and employee headcount.   These factors comprise the 
“Massachusetts Formula”, a widely accepted and time‐tested approach for allocating many Corporate 
Shared Services costs among jurisdictions and utility affiliates.   
This approach allows us to directly compare costs for our panel of utilities, where they range in size, from 
$1 billion to $10 billion in gross margin, from $2 billion to nearly $26 billion in net assets, and from 500 
to 23,000 full time employees. Through the use of the Massachusetts Formula, as described below, we 
have normalized all of these companies, to the actual size UW‐NY.      
This normalization is a three‐step process: 
Step 1: Calculate the Average Massachusetts Formula for the peer group: 
a. Separately total the gross margin, net assets, and headcount for UW‐NY and all other 14 utilities 
in the panel; 

7 M&S costs, including corporate assumptions, and costs related to these services that are embedded in the utility affiliates.
8 PA has confidentiality obligations with each utility. They will be labelled “A”, “B”, “C”, etc.
9 Bureau of Labor Statistics: CPI Detailed Report Data for December 2014
3 BENCHMARKING OVERVIEW
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b. Calculate the percent of the total for each utilities (1) gross margin, (2) net assets and (3) 
headcount; and, 
c. Determine the average 1+2+3 above for each company. 
d. This result equates to the average Massachusetts Formula for UW‐NY and each of the other 14 
utilities in the peer group. 
Step 2: Calculate the Normalization Factor 
a. For each utility in the panel, divide it’s average Massachusetts Formula, from Step 1(d) above, 
by the average Massachusetts Formula for UW‐NY, also from Step 1(d) above; 
b. This result is the normalization factor for each utility. 
Step 3: Normalize the Services Cost for each Utility in the Panel 
a. Multiply the normalization factor, determined in Step 2 above, by the actual 2013 costs10 for 
each shared service for each utility in the peer panel; 
b. Costs for shared services in all utilities in the panel are now normalized; 
c. Now, each member of the peer panel has been adjusted in size to that of UW‐NY. 
3.3 Benchmarking Results
Once each utility in the peer group is normalized to the size of UW‐NY, we use the median cost of the 
peer group for each Service to compare to actual 2014 UW‐NY. 
We report our findings for each Service in Chapter 4, the Economic Analysis section of this report, using 
the following charts and tables. 
For Services where the UW‐NY actuals costs are at or below the median of the normalized peer panel, 
we will show those results in GREEN similar to the chart below, 

10 Inflated by 1.6% as discussed above.
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The red line represents the median of the normalized peer panel
For Services where the UW‐NY actuals costs are above the median of the normalized peer panel, we will 
show those results in RED similar to the chart below. 

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As shown above, once normalized, the display will show where the M&S costs charged to UW‐NY fit in 
the overall cost structure of the peer group.  Differences can be the result of several different factors 
including: the overall higher or lower cost structure of the peer; the presence of economies of scale, and 
the demographics of the respective service territories.   
These benchmark comparisons provide an understanding of the efficiency with which M&S provides 
each Shared Service to UW‐NY, in comparison to our nationwide panel of utilities. 
This information will also be displayed numerically in a table as shown in the example below: 
(Name of Service)
($000)
Peer Group Median 963
2012 UW-NY Actual Costs 827
UW-NY Costs vs. Peer Median (136)

3.4 Analysis of Benchmarking Results
Typically, our methodology allows us to understand which sub‐process elements are driving the cost of a 
service to be above or below the median.  First we look for one‐time cost or costs that have spiked for 
some reason.  For example, we might see certain Regulatory Business Services or Legal Services increase 
inordinately as a result of a particular regulatory proceeding. Once we have identified the outlier, we can 
make a judgment regarding the efficiency of the shared services process. 
PA’s template for gathering benchmarking data is a rigorous data request of information from the 
Company that matches the data received from the other utilities in our peer panel. 
The template includes approximately 190 cost data points related to a vast array of shared services 
provided to utility affiliates.  We ask the Company to provide detailed cost information for each one sub 
processes. These data points are then aligned with the Shared Services. 
Below is an example of this template which was sent to the Company as a data request. 

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Portion of Benchmarking Template for Information Technology

Dept.
Sub Process
Code
Sub Process
Title Sub Process Definition Cost Data11
IT IT01 Maintenance
of the
Application
Portfolio
Technical support, problem resolution, application of minor
enhancements, upgrades and patches. License and
maintenance fees for the application portfolio should be
included here. This sub-process INCLUDES execution and
management review of IT controls for existing applications
for SOX purposes, however independent SOX testing
should be reported in FI22a.

IT IT02 Data Center
Operations &
Production
Control
Operate & monitor data center infrastructure and
applications, backup & restore services, change
management administration, batch job management,
HW/SW installation and decommissioning. This includes
disaster recovery facilities and the overall disaster recovery
plan. Disaster recovery for individual applications is
included with each application or piece of infrastructure.
This sub-process includes asset management activities for
data center assets. This sub-process INCLUDES execution and management review of data center IT
controls for SOX purposes, however independent SOX
testing should be reported in FI22a.
Includes:
Common server & storage support work,
E-mail, Instant message, Internet content filtering, user
directories.

IT IT03 Computing
Engineering
Design, test, implement, and monitor technical issues within
the data center production, storage and communications
infrastructure.

IT IT04 Process and
Project
management
Process development, support and management of
methodologies and measurements for effective delivery of
business solutions.
Includes:
IT PMO and project management resources for solution
and implementation projects.

IT IT05 Development
of Solutions
Design, develop, test and implement new information
technology features or functions that provide business
solutions and application development. This sub-process
INCLUDES execution and management review of IT
controls for SOX purposes for new applications, however
independent SOX testing should be reported in FI22a.
Excludes:
Project Management Office (PMO) or resources dedicated
to project management activities.

IT IT06 Enterprise
Architecture
Design, test and implement new information technology
standards and tools for computing environments.

Once the data is provided and verified, we typically compare each sub‐process cost to the panel and 
identify which one(s) may be contributing to the total Shared Service being above the median. 
However, M&S could not complete our full data request due to the complexity of the request and degree 
time and effort to complete within the schedule set by the Commission. 

11 We request this data be provided in detail i.e. FTE’s, labor, outside services, material & other costs.
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As a result, PA used its experience in these matters as well as meeting and interviews to attempt to 
identify cost causation factors. 
3.5 Schedule
The contract for the Comprehensive Review of United Water Management and Services Fees was 
awarded to PA Consulting Group on February 23, 2015.  Project planning commenced immediately upon 
award and consisted of the review of documents attached to the contract, the preparation and 
submission of an initial data request, planning for the project kick‐off meeting held on March 5, 2015, 
the review of responses to the initial data request, and coordination of activities required to complete 
the benchmarking study (the activity with the longest lead time). 
Following the kick‐off meeting, on‐site fieldwork began the week of March 9, 2015 which included 
interviews with functional area heads, continued benchmarking study data gathering and analysis, 
transaction audits, accounting and internal controls reviews, and reviews of allocation practices including 
an assessment of the three‐factor general allocator and the cost allocation manual. 
The draft report was completed on April 15, 2015 and submitted to the client for fact checking, and the 
final report provided on April 24, 2015.  There  were a total of eight weeks available to complete the 
agreed upon work tasks.  This timing was driven by a filing deadline of April 27, 2015. 

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4.1 Total Cost of M&S Shared Services
The focus of this comprehensive review is on the fees UW‐NY is charged by M&S. However, to assess the 
effectiveness and efficiency of the services provided to UW‐NY, PA believes the review needs to also 
include an assessment of the service costs in the aggregate (or M&S level). An analysis at this level avoids 
issues associated with differing capitalization and cost allocation practices which impact service costs at 
the individual operating company (e.g., UW‐NY) level.   
To assess the effectiveness and efficiency of the services provided by M&S, PA compared the total cost 
of each of the ten services (described below) to the normalized peer panel median value of these same 
services for the companies participating in PA’s Corporate and Shared Services benchmarking study.  Our 
specific approach to completing this assessment, as well as the results of this assessment, is provided in 
Appendix A to this report.   
The remainder of this chapter is devoted to the Economic Analysis of the cost of M&S Shared Services to 
UW‐NY. 
4.2 Shared Services Cost to UW-NY
Our approach to assessing costs charged to UW‐NY was similar to that used to assess costs in the 
aggregate.  For each of the ten services, we identified the comparable costs on the books of UW‐NY for 
2014 and compared those costs to the normalized peer panel median value for these same services.  
The benchmarked cost of the ten services included the cost of employees embedded in the business 
units in UW‐NY and other applicable UW‐NY direct costs.  Shown below are the total 2014 costs charged 
to UW‐NY.  Note that the total cost to UW‐NY is $1.5M or 19.5% below the peer panel median. 
Service
Peer Panel
Normalized
Median
Total M&S
Charges to
UW-NY Difference
($000)
($000) ($000)
Financial Planning $348 $705 $357
Accounting 301 1,005 704
Treasury 356 323 (33)
Internal Audit 136 162 26
Information Technology 4,281 2,208 (2,073)
Human Resources 57 397 (175)
Legal 589 473 (116)
Procurement 346 130 (216)
Corporate Communications 458 458 1
Regulatory Business 287 311 26
Total $7,671 $6,172 $(1,499)
4 TASK ONE: ECONOMIC ANALYSIS
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4.3 Need and Benefit of these Services to Ratepayers
Based on our experience in the utility industry as well as our discussions with UW‐NY employees, there 
is little doubt that all the Services shown in the table above are required Services that benefit the 
Company and its ratepayers.  They are all necessary components of a corporate structure.  
As noted previously, a Service Company is set up to provide a common suite of services to several utility 
service provider affiliates.   This  enables significant specialization and provides the scale to enable 
investment in sophisticated information systems to support all processes. Often, corporate acquisitions 
of additional utility service providers result in an increasing ability to share the costs of these specialized 
services over a greater base.  This is referred to as “economies of scale”.  Economies of scale benefit 
ratepayers by the “sharing” of services and costs among affiliates those reducing the costs to individual 
affiliates, including UW‐NY. 

4.4 Third Party Market Information
In theory, all corporate services could be sourced from third party providers. However, this breaks down 
in practice, as, for example, virtually every major corporation of which we are aware has prudently 
chosen to retain leadership, governance, and certain technical skills and services in house.  This is to 
ensure their responsibilities to shareholders, regulators, and customers are being met with effective and 
consistent company policies and standards, while confidential and proprietary information is properly 
safeguarded. 
In addition, we consider whether there is a significant relationship between the Service and an impact on 
UW‐NY customers that might affect service and reliability.  
Many Services require specific knowledge of utility regulation as well as the various technology and 
Information Technology systems that would make outsourcing unadvisable.  Others are an integral part 
of UW’s strategic and business planning process.  In some instances we considered the economic and 
practical realities of outsourcing a small volume of services and the costs to manage a small contract. 
With this logic in mind, we have identified certain M&S provided services that we would not recommend 
for outsourcing to third parties.  These include: 
 Accounting Services; 
 Financial Planning Services; 
 Procurement Services; 
 Accounts Payable Services; 
 Treasury Services; and, 
 Regulatory Business Services. 
For these Services, we have not explored, in any detail, the costs associated with third party outsourcing, 
either at the M&S cost pool level or at the individual utility level. 
However, there are certain services that can be prudently outsourced, at least in part, given that the 
governance and strategic aspects of the service are maintained in‐house. Examples include:  
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 Internal Audit Services; 
 Human Resource Services (e.g. Payroll); 
 Information Technology Services (e.g. Helpdesk); and, 
 Legal Services (e.g. Litigation). 
 For certain services, the combination of the attributes of the service and the resources available in the 
marketplace make the use of a staff augmentation sourcing model is more cost effective (i.e., where a 
level of internal staffing is maintained, but is augmented by outsourcing certain activities or workloads), 
while for other services a comprehensive outsourcing could be the most cost effective market solution. 
Generally, PA is able to obtain sufficient market information to analyze Shared Service costs to the 
outside market from the utilities that engage us.  For example, in some cases we have obtained reports 
form compensation consulting firms engaged by the utility to analyze its compensation plans. 
We were informed that the Company had data from Towers Watson, Mercer and PayFactors.  
Towers Watson & Co. is a global professional services firm. Its principal lines of business are risk 
management and human resource consulting. It also has actuarial and investment consulting practices.  
Mercer is a global consulting firm in talent, health, retirement, and investments.  Its  services include 
human resources consulting regarding benefits and compensation. 
According to their website, PayFactors offers a robust source of market data for over 4,000 jobs from 
across 143 different industries, all benchmarked following World at Work standards. 
We requested a complete set of data from these sources but we were unable to obtain market 
information for all Shared Services in time for the release of this report. Where we received sufficient 
data we will comment on it. Otherwise, PA’s conclusions regarding the availability of market service 
choices will be based on our experience in the industry. 
Following is our function‐by‐function economic analysis for the ten services identified above.  
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4.5 Financial Planning Services
4.5.1 Description of Financial Planning Services
Financial Planning Services include: 
 Assessing the business environment; identification of key issues; developing business unit 
strategies and objectives, and examination of alternatives; developing multi‐year 
earnings, margin, cash, O&M, and capital plan; modeling the financial impact of new 
capital investments and balance sheet restructuring; forecasting for regulatory filings; 
performing analytic support for external stakeholders, and governing corporate capital 
expenditures;  
 Develops business unit and department financial business plans for the next year 
including earnings, margin, cash, O&M and capital plans;  
 Performs analysis of results and prepares variance commentary for earnings, margin, 
O&M, and Capital within the Company and business unit;  
 Prepares and revises forecasts for earnings, margin, cash, O&M, and Capital within the 
business units; and,   
 Review's actual information and projects the remainder of the current year future years. 
This function performs “what‐if” analysis for various scenarios for business unit decision‐
making. 
Financial Planning Services are the responsibility of the Senior Director, Financial Control & Corporate 
Finance within the Senior Vice President & Chief Financial Officer organization.  There are a total of 
fifteen employees providing Financial Planning Services.  
In addition, there are three embedded employees in UW‐NY. These embedded employees provide 
support to the UW‐NY President for planning and budget related matters as well as support to the M&S 
Financial Planning organization.  Costs for these employees have been included in the M&S costs for 
benchmarking purposes. 
4.5.2 Results of Financial Planning Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Financial Planning 
Services with the median of our panel.  
As noted above, the cost for Financial Planning Services to UW‐NY in 2014 was $705K.  
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$460 $245 $705 $348
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The chart below compares this actual total cost with the peer median costs and shows that the total cost 
to UW‐NY is well above the line. 

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $357K or 
102.6% above the median. 
Financial Planning Services
($000)
Peer Group Median $348
2012 UW-NY Actual Costs $705
UW-NY Costs vs. Peer Median $357
4.5.3 PA Comment On These Results
Analysis of the results of this benchmarking result is hampered by the fact that Financial Planning could 
not complete the sub‐process cost template that PA provided with our initial data request. This template 
beaks cost down into sixteen sub‐process cost pools for Financial Planning that would identify which sub‐
processes are driving the cost above the median. These templates take a significant amount of time and 
effort to complete.   
Unfortunately, the schedule for the completion of the report and the required filing date with the PSC 
did not allow sufficient time to complete the process.  
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However, we are able to make the following observations regarding Financial Planning that likely 
contribute to its higher costs. 
As shown on the following page Suez Environment North America (SENA) has a complex organization 
structure.  SENA operates in approximately twenty States as well as in Canada.  The other members of 
the peer panel will have various numbers of affiliates or business unit but SENA is well above the number 
of business units supported by the panel members. 
As we will discuss later in this Section, the much lower than peer panel median spend for Information 
Technology is an indication that the upgrading and modernization of UW’s financial and operating 
systems has not been a priority.  While UW is in the process of upgrading its financial systems to the 
latest version of the PeopleSoft ERP and adding a front end business planning and budgeting tool 
(Hyperion) with implementation later this year, there need to be a thorough examination of UW’s IT 
processes and systems resulting in a long term IT Strategic Plan. 
Similar investments in these technology enablers have typically already been made by most of the peer 
panel companies.   
As noted above, during the review period (2014) there were three embedded employees in UW‐NY 
providing Financial Planning Services. Staffing levels have since been reduced from three employees to 
two employees.  As we noted earlier, one of the benefits of the shared services structure is the increase 
in ''economies of scale'' whereby the cost of centralized services are allocated over a large (and growing) 
universe of service users. The matrix style of structure adopted by M&S for Financial Planning can 
partially defeat that benefit when employees remain embedded in the operating company.  
The total number of employees providing Financial Planning service is twenty‐seven (fifteen at M&S + 
twelve embedded). The normalized median of employees staffing for Financial Planning in our peer 
panel is nineteen. Thus, M&S Financial Planning has eight more employees than the peer panel median. 
This would add a higher level of costs for allocation to UW‐NY, The complexity of SENA structure and the 
number of affiliates requiring services is a likely driver for these higher staffing levels and costs. 
Financial Planning is comprised of mostly more senior employees than many of the other services at 
M&S and, in our experience, in the peer panel.  This results in higher employee related costs for Financial 
Planning. 
Finally, the cost allocation factor for allocating Financial Planning costs to affiliates is total Capitalization. 
Business units with fewer assets would likely receive a lower allocation of costs if a more appropriate 
factor were used. 
4.5.4 Market information for Financial Planning Services
Currently Outsourced Services 
There are no outsourced Financial Planning Services. 
Appropriateness for Third Party Provisioning 
Financial Planning is an integral part of M&S’s strategic and business planning.  Many of the functions 
performed have a direct impact on UW‐NY ratepayers by developing financial plans supporting capital 
expenditures that effect service and reliability.   
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For this reason and others discussed above, in our opinion, it would not be prudent to outsource 
Financial Planning Services from a third party. 
Available Market Information 
PA has not examined market information for Financial Planning Services.

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4.6 Accounting and Tax Services
4.6.1 Description of Accounting and Tax Services
Accounting and Tax Services includes the following: 
 Managing the monthly closing process including account reconciliations, accounting issue 
resolution, and process improvement; preparing standard monthly journal entries and analysis 
to support accounting;  
 Managing the accounting for fixed assets including: work order creation and set‐up, analysis and 
monitoring of capital projects; creating and managing fixed asset records including asset 
addition, retirements, transfers or adjustments and the preparation of any related journal 
entries and account reconciliations; reporting of plant asset information for financial, audits, 
regulatory reporting, rate cases or other internal needs; process associated with the 
development, analysis, and accounting for depreciation;   
 Managing accounting policies, GAAP research, and implementation of new accounting 
pronouncements; providing guidance on accounting issues; communicating any new accounting 
guidelines and procedures and their impact to appropriate organizations organization;  
 Determining technical accounting details for specific transactions; performs research, 
consultations with external audit and guidance provided to the Company; 
 Preparing and filing standard regulatory reports, and other mandated reports as well as with 
preparing the accounting information needed to complete the annual report;  
 Ensures accurate accounting in all accounts;   
 Performs tax services including audit of assessed property taxes, payment of property taxes, and 
the accounting for property taxes; 
 Develops long‐range tax planning to optimize tax positions for the Company; this also involves 
analysis of laws and regulations as they impact the company’s interest;  
 Files federal state and local tax returns and defends all related income tax audits as well as all 
applicable sales, use, and gross receipts tax returns; and,  
 Ensures proper accounting in all tax accounts. 
Accounting Services responsibility is with the Corporate Controller, within the Senior Vice President & 
Chief Financial Officer’s organization.  There are thirty M&S employees that provide these services to 
UW‐NY and other M&S affiliates.  
The Corporate Tax related services above, are performed in the Director, Tax Compliance, which is also a 
part of the Senior Vice President & Chief Financial Officer’s organization. There are seven employees 
providing these services. 
M&S provides all the Accounting and Tax Services required by UW affiliates and there are no embedded 
employees at UW‐NY.   
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4.6.2 Results of Accounting Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Accounting Services 
with the median of our panel. 
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$1,005 - $1,005 $301
As shown above, the total cost of Accounting Services to UW‐NY is $1.005M 
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is well above the Median. 

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $704K or 
233.8% above the median. 
Accounting Services
($000)
Peer Group Median $301
2012 UW-NY Actual Costs $1,005
UW-NY Costs vs. Peer Median $704
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4.6.3 PA Comment On These Results
Analysis of the benchmarking results was hampered by the fact that Accounting & Tax Services could not 
complete the sub‐process cost template that PA provided with our initial data request. This template 
beaks cost down into fourteen sub‐process cost pools for Accounting & Tax Services that would identify 
which sub‐processes are driving the cost above the median. These templates take a significant amount of 
time and effort to complete and, unfortunately, given the project start date, the schedule for the 
completion of the report and the required filing date with the PSC did not allow sufficient time to 
complete the process.  
However, we are able to make the following observations regarding Accounting & Tax Services that likely 
contribute to its higher costs. 
As shown on above, SENA has a complex organization structure.  SENA operates in approximately twenty 
States as well as in Canada.  The other members of the peer panel will have various numbers of affiliates 
or business unit but SENA is well above the number of business units supported by the panel members. 
The total number of employees providing Accounting & Tax Services is thirty‐seven (thirty for Accounting 
and seven for Tax). The normalized median of employees staffing for Accounting & Tax Services in our 
peer panel is thirty‐four. Thus, UW Financial Planning has three fewer employees than the peer panel 
median.   
Accounting Services management have told us that their processes continue to be highly manual 
including the reconciliation of 44 bank accounts.   Management also indicates that they continue to 
rework/revise accounting issues from past years 
As we will discuss later in this Chapter, the much lower than peer panel median spend for Information 
Technology is an indication that the upgrading and modernization of M&S’s financial and operating 
systems has not been performed.  While M&S is in the process of upgrading its financial systems to the 
latest version of the PeopleSoft ERP, with implementation later this year, there need to be a thorough 
examination of UW’s IT processes and systems resulting in a long term IT Strategic Plan. 
Finally, the cost allocation factor for allocating Accounting & Tax Services costs to affiliates is Total 
Capitalization. Business units with significant assets would likely receive a lower allocation of costs if a 
more appropriate factor were used. 
4.6.4 Market information for Accounting Services
Appropriateness for Third Party Provisioning 
Accounting and Tax Services in the utility industry require specific knowledge of regulatory and tax 
accounting as well as the various technologies used in the industry.  In addition, detailed knowledge of 
departmental budgets and IT systems would make outsourcing unadvisable.   For  these reasons and 
those discussed previously, in our opinion, it would not be prudent to source Accounting Services from 
third parties. 
Currently Outsourced Services 
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Local expertise is engaged to investigate and challenge property and gross receipts tax assessments.  
Forensic audit firms have been utilized for independent review of accounting issues.   
Available Market Information 
PA did not review any market data for Accounting Services. 

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4.7 Treasury Services
We have included the following cost pools in Treasury Services: 
1. Treasury Services (Cash Management; Corporate Finance) 
2. Accounts Payable 
4.7.1 Description of Treasury Services
Treasury Services include: 
 Short term borrowing and investing, including activities such as, commercial paper 
issuance and associated activity or issuance fees, rating agency activity or issuance fees, 
money, cash pooling, EFT originations, tax payments, intercompany loans administration 
of transactions and daily settlement, determining daily cash position, and costs for issuing 
and paying agents;  
 Daily cash account reconciliations, treasury workstation administration; bank or third‐
party fees, such as service charges, positive pay fees, and security related fees for both 
utility and non‐utility account; all bank credit facility costs (e.g. bank lines, credit lines, 
revolvers) including any upfront fees and on‐going fees;  
 Develops a long‐range financing and dividend strategy consistent with the targeted credit 
profile, setting balance sheet targets, developing and recommending hurdle rates for the 
company’s business lines;  
 Rating agency relations includes managing communications with the three agencies.  It 
also includes annual rating maintenance fees and commercial paper surveillance fees;  
There are three M&S employees who provide these and other Treasury Services.  They report to the 
Vice President, Treasurer. 
Accounts Payable 
The Accounts Payable Services performed for UW‐NY by M&S include: 
 Processing and payment of vendor invoices, including special payments, for goods and 
services purchased through a purchase order;  
 Special payments meant to capture payments to vendors and other service providers that 
are made on a expedited basis, or are processed without all of the normal elements of an 
invoice, a purchase order, and a notice of receipt;   
 Managing and monitoring the use of the M&S Procurement Card process 
There are six M&S employees providing Accounts Payable Services.  They report to the Vice President, 
Treasurer. 
There are no embedded employees at UW‐NY.  
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4.7.2 Results of Treasury Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Treasury Services 
with the median of our panel. 
M&S
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$323 - $323 $356
As shown above, the cost of Treasury Services to UW‐NY is $323K. 
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is below the peer median.  

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $33k or 
9.3% below the median. 
Treasury Services
($000)
Peer Group Median $356
2012 UW-NY Actual Costs $323
UW-NY Costs vs. Peer Median $(33)
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4.7.3 PA Comment On These Results
Treasury Services does not perform some sub‐processes such as Investor Relations, which contributes to 
its lower costs. There are a total of forty‐four banks that the Treasury Services organization interfaces 
with.  The median employee staffing for Treasury Services in our peer panel is fifteen. This compares to 
the ten for M&S Treasury Services. 
4.7.4 Market Information for Treasury Services
Currently Outsourced Services 
Treasury has outsourced Payroll Services to ADT.  The latest contract was effective January 13, 2013 for 
five years.  Payroll has been aligned with Human Resources for the purposes of this report. 
Appropriateness for Third Party Provisioning 
Treasury Services is an integral part of UW’s financial processes.  Many of the functions performed have 
a direct impact on UW‐NY ratepayers by developing financing plans that reduce revenue requirements 
while obtaining capital required for expenditures that effect service and reliability.  This requires not 
only keen finance skills but also solid knowledge of the financing markets available to the utility industry.  
For these reasons and those discussed previously, in our opinion, it would not be prudent to outsource 
Treasury Services. 
Accounts Payable Services processed 132,800 invoices in 2014. These invoices totaled approximately 
$432.7M from 8,677 active suppliers. To process this volume in an efficient manner requires that 
Accounts Payable staff have a sound familiarity with the products and services provided and the 
organizations that benefited from them, and be tightly integrated with these organizations 
technologically.   For  these reasons and those discussed previously, in our opinion, it would not be 
prudent to outsource Accounts Payable Services to a third party. 
Also, as noted above, these services do not appear to be over‐staffed and are operating below the peer 
panel cost line.  We do not see a cost advantage to outsourcing these services. 
Available Market Information 
PA has not examined market information for Treasury Services. 

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4.8 Internal Audit Services
We have included the following cost pools in Internal Audit Services: 
1. Internal Audit 
2. Corporate Ethics Compliance 
4.8.1 Description of Internal Audit Services
M&S Internal Audit Services is established as an independent area primarily responsible for the analysis, 
assessment and supervision of the relevant internal control and risk management systems for the 
Company.  Services include: 
 Performs independent, objective assurance and control advisory services.  This includes 
all audits as well as development of forward looking audit plans that are independent and 
reviewed with the Company's Audit Committee; and, 
 Manages and administers corporate ethics compliance programs.  This includes various 
codes of conduct requirements, whistle‐blower cases, ombudsmen services, and 
associated compliance reporting.   
Internal Audit Services are the responsibility of four M&S employees including the Director of Internal 
Audit who reports to the CEO with direct oversight by the Board of Directors and United Water’s parent 
company.  
There are no embedded employees at UW‐NY or other affiliates.  All costs are at the M&S level and are 
directly charged or allocated to affiliates. 
4.8.2 Results of Internal Audit Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Internal Audit 
Services with the median of our panel. 
M&S
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$162 - $162 $136
As noted above, the cost for Internal Audit Services to UW‐NY in 2014 was $162K.   
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY.  

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As the chart above shows, Internal Audit Services is above the median level of the peer panel. 
Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are above 
the median.  Internal Audit costs to UW‐NY are $26K or 19.1% above the peer panel median. 
Internal Audit Services
($000)
Peer Group Median $136
2012 UW-NY Actual Costs $162
UW-NY Costs vs. Peer Median $26

4.8.3 PA Comment On These Results
In our meeting with the Director of Internal Audit, we learned that there was an unplanned engagement 
performed for UW‐NY in 2014, the costs of which were directly charged to UW‐NY.  
4.8.4 Market Information for Internal Audit Services
Currently Outsourced Services 
External Audit Services are currently sourced to Mazars.  The use of an independent external auditor is 
consistent with best practice. Internal Audit Services are not currently outsourced.   
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Appropriateness for Third Party Provisioning 
In 2014, Internal Audit completed 25 audits consuming 6,460 hours.  22 audits are planned for 2015. 
Utility Internal Audit Services organizations are typically staffed with versatile, multi‐disciplinary, 
professionals with an in‐depth knowledge of the utility industry. Team members typically bring to bear 
their in‐house experience within the utility business units and they generally have prior experience in 
public accounting.  
While Internal Audit Services has the potential to be outsourced, in our experience at investor‐owned 
utilities, the service is not typically outsourced.  Only one of the utilities in a prior peer panel used an 
outsourced service provider for Internal Audit and we have observed that this approach has resulted in 
higher than average costs for that utility.    
On the other hand, Internal Audit Services will, on occasion, outsource specific one‐time audits that 
either required specific expertise not found in the organization or other workload requires temporary 
staff augmentation.  Internal Audit informs us that they had no such instances during 2014. 
In our opinion, Internal Audit Services is not a service where UW‐NY could reasonably expect cost 
savings to be achieved through outsourcing. 
Available Market Information 
PA did not investigate market information for Internal Audit Services.   In our experience, pricing for 
these services reflect many factors, which combine to make pricing difficult to assess.  Given that the 
overall cost of Audit Services is equal to the peer panel median, we did not analyze the market further 
for these services. 

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4.9 Procurement Services
4.9.1 Description of Procurement Services
Procurement Services includes procurement planning and scheduling; RFP, RFQ, RFI creation; and 
management of the bidding process which consists of bidder selection, invitation, bid package 
preparation and distribution, bid evaluations, vendor selection, and contract award, including master 
agreements. 
There are fourteen M&S employees who provide Procurement Services to the UW affiliates.     They 
report to the Vice President Treasury & Chief Procurement Officer. 
There are no embedded employees in UW‐NY providing Procurement Services. 
Procurement Services issued 84 RFPs, RFIs, and RFQs for professional services in 2014. 
4.9.2 Results of Procurement Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Procurement 
Services with the median of our panel. 
The table below shows this cost as compared to the peer panel median for this Service. 
M&S
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$130 - $130 $346
The cost for Procurement Services to UW‐NY in 2014 was $130K.   
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is below the peer median.  
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Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $216K or 
62.4% below the median. 
Procurement Services
($000)
Peer Group Median $346
2012 UW-NY Actual Costs $130
UW-NY Costs vs. Peer Median $216
4.9.3 PA Comment On These Results
None 
4.9.4 Market Information for Procurement Services
Currently Outsourced Services 
There are no Procurement Services outsourced to third parties. 
Appropriateness for Third Party Provisioning 
Procurement Services requires specific and detailed knowledge of the water utility business, and 
contributes the most value to the business when it is tightly integrated with utility operations.  PA does 
not consider this service as a candidate for third party sourcing. 
Available Market Information 
PA did not review market information for this service   
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4.10 Legal Services
4.10.1 Description of Legal Services
Legal Services provides the following services: 
 Legal Services handles all matters related to general litigation involving the corporation;  
 Performs legal services for securities and corporate financial transactions, financial 
reporting and disclosures, business organizations, mergers, acquisitions and business 
development, corporate governance, internal controls and risk management, insurance, 
executive compensation;  
 Manages legal services for commercial and contract law matters for the corporation, 
including real estate matters and land use permits;  
 Serves as board secretary and support corporate governance functions, board of directors 
meetings, legal opinion letters, assists audit and compliance functions, performs and 
attests internal controls, and ensures compliance with corporate registration and 
regulation; 
 Retains and manages external counsel to provide legal representation in specialized areas 
of law and to manage variable level legal work; 
 Legal work supporting the negotiation of water purchase agreements and other 
procurement contracts as well as legal work related to franchise renewals, water rights; 
 Provides legal advice and representation with regard to intellectual property matters;  
 Performs legal services for matters involving environmental law for the corporation 
including environmental permitting activities, due diligence, defense in enforcement 
actions, compliance advice, representation in environmental clean‐up and environmental 
litigation costs; 
 Provides legal advice, representation and counselling in matters arising under federal and 
state water regulatory laws, regulations and policies as they relate to the Company’s 
utility related assets for water and waste water; 
 Provides risk management services including management of the insurance and surety 
bond programs; and,   
 Manages and administers corporate legal and regulatory compliance programs, other 
than Ethics Compliance.  
Legal Services are the responsibility of the Vice President, General Counsel.  There are twenty‐one M&S 
employees providing Legal Services at M&S, including two employees providing risk management 
services.  
There are no embedded UW‐NY employees performing Legal Services.  
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4.10.2 Results of Legal Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Legal Services with 
the median of our panel. 
M&S Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$473 - $473 $589
As noted above, the cost for Legal Services to UW‐NY in 2014 was $418K.   
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is below the peer median.  

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $116K or 
19.7% below the median. 
Legal Services
($000)
Peer Group Median $589
2012 UW-NY Actual Costs $473
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UW-NY Costs vs. Peer Median $116
4.10.3 PA Comment On These Results
None 
4.10.4 Market Information for Legal Services
Currently Outsourced Services 
Legal Services currently outsource a significant amount of work.   In  2014, the amount outsourced 
totaled $3.1M, or 58.2%, of total legal spend for the year.   
Appropriateness for Third Party Provisioning 
There are certain Legal Services that can be prudently outsourced, at least in part, given that the 
governance remains at M&S.   As discussed above, Legal Services at M&S utilizes third‐party legal 
services frequently. 
Available Market Information 
The legal work routinely outsourced is usually of a complicated, specialized nature where the company 
is seeking to obtain specialized knowledge and expertise.   Senior ‐level legal resources are typically 
selected for these assignments based on the possession of these specialized, unique skills.  
PA did not review market information for legal services. 

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4.11 Information Technology

4.11.1 Description of Information Technology Services
Information and Operations Technology Services include: 
 Operates and monitors data center infrastructure and applications, backup & restore 
services, change management administration, batch job management, hardware and 
software installation and decommissioning;   
 Technical support, problem resolution, and the application of minor enhancements, 
upgrades and patches to applications;  
 Develops, supports and manages methodologies and measurements for effective delivery 
of business solutions;   
 Designs, develops, tests and implements new information technology and new 
information technology standards and tools for computing environments.  
 Services provide support center user interface as well as Tier 1 and Tier 2 support for End 
User support requests; 
 Installs, maintains and resolves service problems for end user computing devices, 
software, LANs and peripherals;  
 Manages the installation, operation, and on‐going network security administration 
including: identity and access management, user provisioning, access control, monitoring 
and managing security systems including firewalls, IDS/IPS, and event management 
systems, vulnerability management (patching and antivirus administration), etc.;  
 Architecture, design, implementation, technical support, problem resolution, application 
of minor enhancements, upgrades and patches for operating and financial systems; 
 Monitors security events, assists with information gathering for required system audits 
and provides project management support for new system implementations, upgrades 
and enhancements; 
 Sets standards for procuring network equipment and supporting configurations; 
 Implements the cyber security policies and controls development and architecture 
evaluation of security solutions and it monitors alignment with best practices, incident 
response planning, and; 
 Manage equipment, service and usage expenses paid to telecom providers for phone, 
data circuits, Internet, etc.  This includes WAN costs such as fiber backbone or microwave, 
whether those WAN costs are external service provider costs or are provided by internal 
resources. 
There are thirty‐nine M&S employees included in this analysis who report to the Senior Director, 
Information Technology. There are no embedded employees.  

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4.11.2 Results of Information Technology Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Information 
Technology Services with the median of our panel. 
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel
Normalized Median
Cost
($000)
$2,208 - $2,208 $4,281
As noted above, the cost for Information Technology Services to UW‐NY in 2014 was $2.2M.  The chart 
below compares this actual total cost with the peer median costs and shows that the amount allocated 
to UW‐NY is well below the peer median.  

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $2.1M, 
or 48.4%, below the median. 
IT Services
($000)
Peer Group Median $4,281
2012 UW-NY Actual Costs $2,208
UW-NY Costs vs. Peer Median $(2,073)
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4.11.3 PA Comment On These Results
Information Technology costs to UW‐NY is below the peer panel median spending by 48.4%.  In our view, 
this indicates that M&S has not made financial and operational system modernization a priority.  As we 
discussed in the Financial Planning and Accounting Services sections above, the complexity of the SENA 
structure require significant manual effort to provide those services.  While the upgrade to PeopleSoft 
scheduled for later this year will provide some relief, it is not clear that UW has long term strategy to 
modernize all financial and operating systems. 
IT Services play a critical role in implementing systems that support the growth of the utility and enable 
efficient management of the complex organizational structure that follows. It appears that UW is 
somewhat behind in developing IT systems and services to address financial system needs. We believe 
this has contributed to the higher than median cost for both Financial Planning and Accounting Services. 
The use of outside services is a common method for modernizing or upgrading IT system. M&S spend for 
IT outside services is less than half the average for our normalized peer panel. 
Another indication of the lack of focus on IT is that there are thirty‐nine employees in M&S IT. Our peer 
panel median number of employees is ninety‐three.  This is a significant gap in resources vs. the peer 
panel benchmark. 
4.11.4 Market Information for Information Technology
Currently Outsourced Services 
Information Technology typically sources a significant number of services to third‐party suppliers.  Data 
provided to PA shows that Information Technology spent $1.980M for outside services in 2014. This is 
10.0% of the 2014 IT spend.   Members of our peer panel average 21.3% of total spend to outside 
services.  
Appropriateness for Third Party Provisioning 
Many IT services are suitable for sourcing to third parties.   These  include; data center operations & 
production control; computing engineering; process and project management; development of solutions; 
help desk; desktop, laptop & LAN services; business engagement; network and infrastructure security 
administration; utility operational technology systems; telecom infrastructure; provide telephony 
services; cyber security. 
The Company has not provided us with a detailed list of outsourced functions. 
Available Market Information 
PA did not review market information for Information Technology. 
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4.12 Human Resource Services
Human Resource Services includes Payroll Services. 
4.12.1 Description of Human Resource Services
Human Resource Services  
 The recruitment, screening, and selection of internal and external candidates;  
 Establishing relocation programs and management of employee relocations, including all 
administration and execution costs of the relocation program; 
 Designs and administers compensation processes including job evaluations, annual salary 
planning, incentive programs, executive compensation, deferred compensation, long 
term incentive programs; 
 Design, management and implementation of health, prescription, life insurance, pension 
and retirement, reimbursement accounts, employee assistance programs, and other 
benefits for all employees; 
 Manages strategy, negotiations, and contract interpretation. This includes arbitration 
resolution, mutual gains bargaining, local management support on grievances, discipline, 
adherence to the contract and training; 
 Identification, development, and delivery of training programs to enhance the skills and 
capabilities of the workforce;  
 Provides support on Human Resources technology and processes, technology strategy 
and solutions, portfolio management, corporate and ad hoc reporting, data analysis, data 
integrity and oversight, and system testing; and, process and release management;  
 Succession planning, performance management, career development, mentoring, 
executive coaching, career planning & development, and employee/organizational 
assessments; 
 Management and administration of all short and long term disability programs and FMLA, 
whether done internally or by a third party; disability insurance premiums, if any, and the 
cost of claims for self‐insured programs and insured programs with a deductible; medical 
services required by the Company for disability cases, such as second opinions, 
consultations, etc.; disability case management and return to work programs; 
investigations of short term disability claims; legal services, whether internal or external, 
related to disability cases;  
 Provides safety training requirements and communication tools, needs assessments and 
training program development, and compliance reporting, including investigation 
leadership and support; and,  
 Labor Relations including contract negotiations and grievance management. 
There are twenty M&S employees providing Human Resource Services in the Vice President, Human 
Resources organization. 
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There are no embedded employees at UW‐NY providing Human Resources Services.  
Payroll Services 
 Payroll Services have been outsourced to ADT. These Services include: the issuance of 
employee payroll checks as well as processing employee withholding information, tax 
withholding deposits, quarterly payroll tax returns, payroll calculations, annual W‐2s and 
1099Rs and government reporting; processes pay adjustments; special pays and 
garnishments; preparing payroll tax filings; printing, stuffing, and distributing pay checks 
and electronic deposit statements;  
 M&S provides call center support for employee calls concerning time and attendance 
issues, as well as pay & recognition related issues (i.e. paycheck, final paycheck, sick time, 
vacation time, floating holidays, etc.); and, 
 M&S also provides guidance to timekeeping system users to troubleshoot time entry 
issues, determine how business processes impact time entry rules, answer time entry 
questions, create reports on time entry data, training to employees on time entry and 
issue communications about time entry/work rules and deadlines. 
There are six employees providing these services at M&S.  These employees report to the Vice President, 
Treasury.  There are no embedded UW‐NY employees providing Payroll Services.  
4.12.2 Results of Human Resource Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Human Resources 
Services with the median of our panel. 
M&S Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$397 - $397 $571
As discussed above, the cost for Human Resource Services to UW‐NY in 2014 was $397K.  
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is below the peer median.  
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Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $174K or 
30.5% below the median. 
HR Services
($000)
Peer Group Median $571
2012 UW-NY Actual Costs $397
UW-NY Costs vs. Peer Median $174

4.12.3 PA Comment On These Results
None 
4.12.4 Market Information for Human Resource Services
Currently Outsourced Services 
We did not receive data from the Company regarding HR market information. 
Appropriateness for Third Party Provisioning 
As discussed earlier, certain services can be prudently outsourced, at least in part, given that the 
governance and strategic aspects of the service are maintained in‐house.  HR services that are typically 
considered for outsourcing include: relocation services;∙temporary staffing managed services program; 
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HR services center;  Medicare coordinator; health and welfare annual enrollment support; retiree drug 
subsidy reconciliation support; wellness program administration; financial basics training program; HR 
survey services; HR coaching; health and welfare plan management & active and retiree annual 
enrollment. 
The Company has not provided a detailed list of outsourced services. However, we were informed during 
a meeting with HR that most of the above services, if provided, have been outsourced. 
Available Market Information 
PA did not review any market information for Human Resources Services. 

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4.13 Corporate Communication Services
4.13.1 Description of Corporate Communication Services
 Media Relations: Research and develop media response, positioning, and strategy to respond to 
media inquiries or place stories in the media.  Develop press releases, arrange interviews, and 
maintain 24/7 media relations availability.   Act  as company spokesperson. Also includes 
communications resources with respect to corporate responsibility, etc.  
 Corporate Awareness Communications or Advertising: General corporate awareness and brand 
image purposes, including "issue advertising". Spend includes agency/vendor fees to create and 
execute advertising.  
 External Informational, Safety, and Educational Communications: Communications or advertising 
spend that provides information and educational messaging on topics such as: billing and 
payment options, such as e‐billing, budget billing, and direct debit; rate options; low‐income 
programs, consumer protection and privacy rights notices; general water efficiency information; 
public safety, including ""call before you dig"" programs; school education programs; special 
educational programs such as environmental programs. 
 Product/Service Promotion: Communications or advertising spend that promotes products or/or 
services from which the utility will benefit.  
 Internal and Intranet Communications: Internal Communications included Company 
communications between employees or departments across all levels, or divisions, of an 
organization.   Intranet Communications includes posting of content to the internal intranet, 
managing intranet user experience, interfacing with IT for intranet administration, measurement 
and analysis of intranet traffic and other data.  
 External Publication and Communications:   Communication  targeted for non‐employee 
audiences (public, media).  
 Annual Report: Design, production, printing and distribution of the Annual report, including 
postage. 
 Internet Website Content Development and Maintenance: Development and/or curation of 
content for all externally facing company websites.  
 Social Media Communications: Management and administration of established corporate social 
media accounts, such as Facebook, Twitter, Instagram, and others, and the delivery of content 
through those social media channels.  

4.13.2 Results of Corporate Communication Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Corporate 
Communications Services with the median of our panel. 

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M&S Allocated to UW-NY
($000)

Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$458 - $458 $458
As noted below, the cost for Corporate Communication Services to UW‐NY in 2014 was $458K.
The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is equal to the peer median.  

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are equal to 
the median. 
Corp. Comm. Services
($000)
Peer Group Median $458
2012 UW-NY Actual Costs $458
UW-NY Costs vs. Peer Median -

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4.13.3 PA Comment On These Results
None 
4.13.4 Third Party Sourcing
Corporate Communications outsources a significant portion of its work.  In 2014, $791k, or 22.5%, of its 
total cost of $3.5M was paid to third party providers for services such as printing, web support 
community relations, and employee surveys. 

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4.14 Regulatory Business Services
4.14.1 Description of Regulatory Business Services
The Regulatory Business Services provided by M&S include: 
 Translation of financial data into a State and regulated revenue requirements, including the 
preparation of supporting work papers for rate cases and other regulatory filings; 
 Internal and external costs for cost of capital and cost of equity testimony;12 calculations of 
formula rates and filings associated with these calculations; 
 Oversight and policy guidance on regulatory proceedings; 
 Management and maintenance of routine State economic regulatory relationships and contacts; 
 Management and maintenance of routine regulatory contacts, with stakeholders;  
 Monitors issues and advocates positions in federal regulatory proceedings as they pertain to the 
Company's businesses;  
 Rate design and tariff administration activities. This also includes tariff interpretation activities, 
marginal cost analyses, and the pricing and tariff‐related aspects of special contracts requiring 
regulatory approval;  
 Participation in technical conferences, monitoring regulatory activities, and discussing issues 
with PUC staff; and, 
 Prepare required State and Federal regulatory reporting for initiatives including service quality 
indicator quarterly reports. 
There are eleven providing M&S Regulatory Business Services including the Vice President, Regulatory 
Business. 
4.14.2 Results of Regulatory Business Services Benchmarking
In order to benchmark UW‐NY costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW‐NY. The table below shows the actual UW‐NY costs for Regulatory Business 
Services with the median of our panel. 
As noted above, the cost for Regulatory Business Services to UW‐NY in 2014 was $311k.   

12 Mostly outsourced
Allocated to UW-NY
($000)
Embedded
UW-NY
($000)
Cost to UW-NY
($000)
Peer Panel Normalized Median Cost
($000)
$311 - $311 $286
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The chart below compares this actual total cost with the peer median costs and shows that the amount 
allocated to UW‐NY is above the peer median.  

Looking at our analysis another way, the table below shows that, the actual costs to UW‐NY are $25k or 
8.7% above the median. 
Reg. Bus. Services
($000)
Peer Group Median $286
2012 UW-NY Actual Costs $311
UW-NY Costs vs. Peer Median $25
4.14.3 PA Comment On These Results
The cost of Regulatory Business function at any utility is typically related to the regulatory activity in the 
jurisdictions it serves.  M&S Regulatory Business supports approximately a dozen regulated affiliates in 
several States.   The peer panel median staffing for this service is eleven, which is the number of 
employees providing Regulatory Business Service at M&S. 
4.14.4 Market Information for Regulatory Business Services
Currently Outsourced Services 
The Regulatory Business at M&S regularly engages third parties for expert analysis and testimony during 
regulatory proceedings.  This is a common practice for specialized services such as depreciation studies, 
cost of service studies, and cost of equity studies. No other regulatory services are outsourced. 
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Appropriateness for Third Party Provisioning 
Regulatory Management Services are an integral part of M&S’s financial and regulatory compliance 
processes.  Many of the functions performed have a direct impact on UW‐NY ratepayers by developing 
plans that support the revenue requirements to obtain capital required for expenditures that effect 
service and reliability.  This requires not only keen finance and regulatory skills but also solid knowledge 
of regulatory compliance requirements and how they have evolved over time.  For this reason, in our 
opinion, it would not be prudent to outsource Regulatory Management Services to a third party. 
Available Market Information 
PA did not investigate market information for this service. 

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5.1 Objective
The objective of the task is to review the current cost structures processes and controls and evaluate the 
strength of those processes and controls to assess the possibility of improper charges and/or 
misallocation of expenses. As described in the RFQ, this objective includes: 
 Evaluating the controls followed by the UW‐NY utilities for affiliate transactions and compared 
those controls to transactions with unrelated parties; 
 Identifying and evaluating controls unique to transactions among the UW‐NY utilities and 
determined whether the controls should be considered compensating for controls found missing 
related to M&S service charges transactions; and, 
 Reviewing the M&S budgetary process and controls to determine the process whereby UW‐NY 
Utilities and M&S coordinate the provision of services and control and monitor the costs of the 
M&S in providing such services. 
5.2 Approach
To accomplish this objective, PA performed the following:  
 Obtained and reviewed documentation of the current system of internal controls related to 
transactions between M&S and the UW‐NY utilities; 
 Interviewed the Director of Internal Controls and Enterprise Risk Management and the Director 
of Internal Audit to understand their roles related to the overall system of internal controls; 
 Assessed the adequacy of the design of the system of internal controls, including controls 
designed to protect against improper charges and/or the misallocation of expenses; 
 Assessed the adequacy of the extent to which the company tests the effectiveness of the system 
of internal controls. This will include discussions with individuals responsible for the execution of 
key controls as well as work performed by both external and internal auditors; 
 Using the results of the work performed in Task 3, assessed the possibility of improper charges 
and/or misallocation of expenses; and, 
 Made recommendations for improvement as appropriate. 

5 INTERNAL CONTROLS
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5.3 Background
There are several different cost streams resulting in costs on the books of the regulated and non‐
regulated business units. The M&S bill does not comprehensively bill for all costs associated with services 
provided by the M&S functional areas; instead, costs are charged or allocated through the following 
processes: 
• M&S billing process (opex only except CC&B costs); 
• Customer Care and Billing (CC&B) system costs – labor costs associated with this system are 
charged to a separate allocation code and allocated to the individual business units based on 
numbers of customers in a process separate from the M&S billing process; 
• Direct charges to capital projects, with completed projects then allocated to the Business Units 
(PA did not review this process); 
• Allocations to the capital overhead activity and loaded on capital projects based on capex spend 
(PA did not review this process); 
• “Corporate Assumptions” – certain non‐labor costs (more fully described below) are directly 
allocated or assigned to individual business units without going through the M&S business 
units; and, 
• Direct Charge – Some costs are specifically identified with specific BUs and are directly charged 
to those business units (e.g., some legal fees, out‐of pocket expenses associated with internal 
audits). 
Due to the complexity of the budgeting and reporting processes associated with the M&S and Corporate 
Assumptions billing processes, budgetary controls over M&S spend in total and on an allocated basis 
generally reside within the M&S Financial Planning department. 
Within the regulated and non‐regulated segments, cost management is focused on costs considered to 
be controllable at the local level and generally exclude allocated costs.  This practice is reinforced by 
short‐term incentive compensation plan (STIP) objectives.  While the financial directors (or staff) located 
in the regulated and non‐regulated segments review the monthly invoices from M&S, the value of these 
reviews from a cost control perspective are limited due to the lack of traceability associated with the 
amounts billed. 
The Company has an established process referred to as COVAL for the design and testing of the system 
of internal controls related to financial transactions.   Responsibility  for the design of the system of 
internal controls resides with the Director of Internal Controls and Enterprise Risk Management with 
responsibility for ensuring the effectiveness of the system of internal controls residing with the Director 
of Internal Audit.  As the subsidiary of Suez Environmental, United Water is not subject to United States 
SOX requirements. 
M&S employee time reports do not require supervisory approval whereas all expense reporting is 
subject to supervisory approval (and multiple levels of approval depending on the amount of the 
charge). 
For M&S functions, budgetary control typically resides at the department head level.   
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5.3.1 M&S Billing Process
The M&S billing process and related system of internal controls is shown in the flowchart in Appendix B. 
The M&S billing process is the responsibility of the M&S Accounting function within the Accounting 
Services department.   The  function is comprised of a Manager, a Senior Accountant, and two 
accountants.  The manager reports directly to Corporate Controller. 
The M&S billing process is integrated with the corporate accounting monthly close process with actions 
and the timing of those actions included in the monthly accounting close calendar.  Controls include the 
review of current period charges and allocations against budget and against prior period (including same 
period last year) actuals for reasonableness. 
The M&S billing process is complicated by the use of forecasted spend rather than actual spend and the 
two (or three) step process whereby certain costs (primarily those coming through the corporate 
assumptions process) are first allocated to M&S departments and then reallocated to the regulated and 
non‐regulated business units.  In  some cases, costs are allocated to M&S Department 950 and then 
reallocated to the specific other M&S business units prior to billing the affiliates. 
Forecasted spend is used in the billing process to levelize the amounts billed.  While M&S is not a profit 
center, the use of levelized spend results in the over (under) allocation of costs on a monthly basis while 
fully clearing out at year end. 
5.3.2 Corporate Assumptions
The term “corporate assumptions” is used to describe the allocation of certain non‐labor costs as well as 
CC&B labor to the business units.  The following table describes costs included as corporate assumptions.  
The origin of the term came from the “non‐controllable” nature of these costs at the business unit level.   
BU Detail Acct Description Allocation Basis Auto 
Allocation? 
00305 AUDIT_FEES Audit Fees Engagement letter No 
00305 AWWARF Water Research Foundation Billed Water volume prior 
year 
No 
00305 BOD_FEES Board of Directors fees Per contract No 
00305 E‐BILLING Charges for billing customer 
electronically 
Count of e‐billed customers No 
00305 IT_HRIS IT HRIS Head count No 
00305 PEBOP_SERP PEBOP BU specific data provided by  
actuary 
No 
00305 PENSION PENSION BU specific data provided by  No 
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actuary 
00305 R&IALLIFEE R&I Alliance Fee Net Uility plant + CWIP+ 
Water Volume+ Fuel+ Power+ 
Chemical 
No 
00305 WIKTI WIKTI is a self‐assessment 
performance improvement and 
benchmarking tool that was 
developed by Suez. 
Net Uility plant + CWIP+ 
Water Volume+ Fuel+ Power+ 
Chemical 
No 
00305 AONACTUFEE Actuarial Fees Tower Watson No. 
00305 AP_IMAGING AP IMAGING Workstations Yes 
00305 BARG Retirement Plan Vanguard 
Admin Fees ‐ Barg 
Head count Yes 
00305 CCB_HDWE Hardware Customer count Yes 
00305 CCB_MAINT CC&B Maintenance Customer count Yes 
00305 CCB_ORACLE Database COBOL & Microfocus Customer count Yes 
00305 CCB_POSTAG Postage Customer count Yes 
00305 CCB_PRINT Printing Customer count Yes 
00305 CCB_PROFEE CCB Infras Outsourcing Customer count Yes 
00305 CCB_SOA SOA Customer count Yes 
00305 CCB_TOOLS SAP Reporting & Data Tools Customer count Yes 
00305 DATA_CTR Data center operations and 
monitoring costs 
Workstations Yes 
00305 ENWISEN Human Resources web site 
hosting cost 
Head count Yes 
00305 GIS Geographic Information System 
maintenance costs 
Workstations Yes 
00305 HELP_LVL1 Help Desk consulting cost Workstations Yes 
00305 IT_ADP IT ADP Head count Yes 
00305 IT_LINES Telecom costs for data network Workstations Yes 
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00305 NON_BARG Retirement plans Vanguard 
Admin Fees ‐ Non Barg 
Head count Yes 
00305 ORACLE_OTH Oracle database maintenance 
costs 
Workstations Yes 
00305 OTHSYSMAIN Other System Maintenance Workstations Yes 
00305 PROF_FEE_O IT professional fees Workstations Yes 
00305 PS_MAINT PeopleSoft Maintenance Workstations Yes 
00305 PS_MISC PeopleSoft Misc. Workstations Yes 
00305 SAFE_TRAIN Pure Safety Training Head count Yes 
00305 SOFTWARE IT PeopleSoft ‐ Software Oracle Workstations Yes 
00305 SOFTWARE‐O Other Desktop Software ‐
Microsoft & Virus 
Workstations Yes 
00305 SUCCESFACT Employees' 
Performance/Development 
review system 
Head count Yes 
00305 WORKCARE Work Care is a contract we have 
with a group of doctors that 
provide early injury intervention 
for all workplace accidents.  
They essentially act as a medical 
intermediary when an employee 
gets hurt to advise on self‐care 
and evaluate the need for an EE 
to go to a medical clinic. 
Head count Yes 
00305 WEB_HOST Web Hosting Workstations Yes 
00305 ETHICS   Head count Yes 
CC&B labor is allocated based on the number of customers by business unit. 
To the extent that M&S employees benefit from these cost pools (for example, using landline telephones 
or help desk services), a portion of the costs will be allocated to M&S as well as the regulated and non‐
regulated business segments.  

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5.4 Findings
The findings presented below are based on discussions with appropriate United Water personnel, 
including representatives from both M&S and UW‐NY, and the review of relevant documentation.   
1. Responsibility for establishing appropriate M&S controlled budgets as well as the appropriate 
assignment of those costs to individual regulated and non‐regulated business units resides at 
“Corporate” (i.e., at M&S). 
a. The regulated and non‐regulated business units Presidents, as a part of the Executive 
Management Team (EMT), review the M&S budget and amount of M&S spend in total and 
allocated to their individual business units. This responsibility does not reside with the 
individual business units, including the operating company general managers. 
b. As M&S budgets are being developed, responsibility for challenging individual M&S 
department budgets is the responsibility of the Financial Planning department, and not the 
responsibility of either the Regulated Segment, as a whole, or individual business units. 
2. Throughout the year, the regulated and non‐regulated business units provide explanations for 
monthly actual‐to‐budget variances including projected variances for the year focused on 
controllable costs. 
a. For the regulated and non‐regulated business units, controllable costs do not include 
allocated costs. 
b. The M&S Financial Planning department has dedicated resources supporting the regulated 
and non‐regulated segments to assist with this analysis and compile segment and aggregate 
level results from the data provided by the individual business units. 
c. As a result of the complexity of the process, short term incentives (STIP) objectives related to 
cost control at the regulated and non‐regulated segments are focused on costs excluding 
M&S charges (that is, excluding allocated costs). 
3. The complexity of the process results in a lack of traceability of allocated costs, from the original 
M&S charge to the amount billed to an individual business unit, implying a lack of transparency. 
This limits the effectiveness of the business unit finance department review of the monthly M&S 
bill. 
a. Allocated costs appear on the M&S bill with the following detail contained in each line item: 
Direct/Indirect, BU, Department Number and Name, Employee Name, Project Charged (i.e., 
allocation code), and amount. 
b. Consistent with the current M&S affiliate agreement, the allocation process loads all 
department costs on labor for billing purposes, so no detail is provided that reflects by 
Department a breakdown, for example, between direct labor, ordinary departmental 
expenses, and major expense items. There is no way to readily compare the billed detail to 
budgeted detail to develop an understanding of the business drivers behind budget‐to‐actual 
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variances, or even understand which departments are driving the variances based solely 
upon a review of the M&S bill.    
c. This review is generally limited to M&S direct charges, which are minor compared to 
allocated charges. 
d. Questions regarding M&S allocations or direct charges are addressed to the appropriate 
M&S Financial Planning group which will then follow‐up with individual M&S departments as 
needed 
4. The M&S Financial Planning department has primary responsibility for M&S variances; individual 
M&S department heads do not formally submit explanations for actual and projected variances and 
do not have formal periodic meetings to discuss operating results.  Variances are reviewed by the 
EMT in the review of the SG&A (Sales, General & Administrative) cost line item. 
a. During our interviews with M&S department representatives, we found a general lack of 
awareness of significant cost items and budget‐to‐actual variances.   
5. The monthly M&S allocations process is well‐defined and controlled, although the efficiency of the 
process could be improved if simplified. 
a. Internal control documentation exists and reflects current practices. 
b. PA confirmed the effectiveness of the allocation process as part of our detailed transaction 
testing with minor exceptions. 
6. The Company uses controls embedded in its PeopleSoft financial system to mitigate the risk that 
M&S departmental costs are allocated to the incorrect business units. 
a. Within certain M&S departments, the cost of resources dedicated to supporting either the 
regulated or non‐regulated segment are accumulated in separate business units (987 for 
regulated and 988 for non‐regulated); allocation mechanisms based on the use of the 987 
and 988 business unit codes automatically allocated these costs to the appropriate 
segments/business units. 
b. The time reporting system limits the allocation codes available for charging purposes based 
on the approved codes for individual employees and departments. 
c. In some instances, entire M&S Department costs are coded as allocable to either the 
regulated and/or non‐regulated segment (e.g., Business Development department costs are 
allocated only to the non‐regulated business segment).  
d. In other instances, dedicated resources within a department charge a code reflecting a 
unique department/business unit combination which is then coded as being allocable to 
either the regulated or non‐regulated business segment.  
e. Coding flexibility is provided to allow costs to be charged to balance sheet accounts; charges 
to balance sheet accounts are automatically excluded from cost pools subject to allocation 
(in 2014, these expenses totaled $1.1 million).  This amount represents costs to be retained 
at Corporate.  
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f. Certain corporate expenses are accounted for within business units other than M&S (e.g., 
Suez management fees and charitable contributions) Costs in these business units are 
excluded from the existing allocation processes. 
7. The system of internal controls follows the M&S affiliate agreement which governs the Company’s 
allocation practices. These agreements do not provide the flexibility to update allocation practices 
without refiling the agreements with the appropriate state regulatory agencies; consequently, 
allocation practices have not been routinely updated to reflect changes in the Company’s business 
environment.  
a. Current processes have been in place for many years. 
b. The business has grown and changed without substantial modifications in the allocation 
factors and / or calculation of these factors. 
8. Some practices exist to ensure the pricing of services provided is at or below market, but 
improvements can be made. 
a. External salary survey data is periodically obtained and used to benchmark internal salaries.    
b. The use of outside service providers (e.g., ADP) appears in line with practices common to the 
utility industry. 
c. The costs of corporate and shared services are not routinely benchmarked.  
9. While the system of internal controls is documented and assessed through COVAL, we did not see 
evidence that the M&S allocation process controls were specifically included. 
a. Internal Audit indicated they did not perform an audit of the M&S fee allocation process in 
2014.  The last internal audit of M&S allocation process controls occurred in 2011.   
10. Employee time reports are not subject to supervisory approval but compensating controls are 
adequate.  
a. Specific guidance was provided to all M&S employees in early 2014 regarding time reporting, 
allocation codes and percentage of time to be capitalized. 
b. The budget process mirrors the actual process, so any significant budget to actual variances 
driven by time reporting practices, which are inconsistent with expectations, would likely be 
detected.   
11. The time reporting guidance provided in 2014 included instructions that time spent supporting a 
specific project for more than 8 hours a week should be charged to that project.  We  found few 
instances in which it appeared that time had been direct charged to a project. 
12. In addition, this guidance provided suggested percentages for time charged to Capex (using the 
“Overhead” project).  These percentages were based on a “high level review.”  
13. M&S department heads generally have budgetary control over costs they are responsible for which 
do not include certain costs such as pension and benefit costs.  
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a. Certain costs are budgeted at the M&S department level (and some M&S departments have 
budgets specifically for certain business unit activities). 
b. Some related costs (e.g., certain legal fees) are budgeted directly by the Business Units. 
c. Some costs are allocated or assigned directly to the Business Units (i.e., Corporate 
Assumptions) with budgetary control at the EMT (or other appropriate senior manager) level 
for the aggregate level of spend. 
14. Spend for capital projects is controlled by the project manager at the project level, and is 
monitored and reviewed by the Corporate Capital Planning function and the EMT (i.e., subject to 
budgetary controls outside the departmental budgetary control processes).   

5.5 Recommendations
1. Change the M&S allocation process to improve the traceability and auditability of M&S costs 
allocated down to the BU level; this will, in turn, improve the perceived transparency of the 
allocation process. 
 For example, consider simplifying the process for allocating non‐labor expenses; i.e., 
separately allocate certain non‐labor costs rather than bill as an adder to labor.   
 Summarize amounts billed at the department (or service) level, rather than show employee 
level detail for allocated costs. 
2. Simplify the allocation process, which is governed by the practices delineated in the current M&S 
agreements, by eliminating the allocation of certain costs to the department level. For example, IT 
and space costs are allocated to individual departments; while the theory behind doing this is 
certainly valid, it may make more sense to consolidate these costs and allocate them in total.   
3. Simplify the allocation process by excluding costs allocated to M&S departments based on the 
number of M&S employees, workstations, etc. from the allocation basis and instead include these 
costs in the amounts directly charged to the regulated and non‐regulated segments.  
4. Consider fully allocating all actual M&S Opex each month rather than using forecasted spend (which 
is within the current M&S agreement) to allocate costs to improve  traceability and auditability, 
which will in turn improve the perceived transparency of the allocation process.  
5. Ensure that Internal Audit reviews the M&S fee allocation process on a periodic basis.  
6. Include a section in the Cost Allocation Manual which describes control processes around costs 
allocated or charged through the Corporate Assumptions process.  
7. Complete a more detailed study to support the allocation of A&G costs to construction.   

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6.1 Objective
Perform a review of a sample of transactions between M&S and the UW‐NY utilities to ensure the 
transactions represent legitimate charges for services provided to the UW‐NY utilities consistent with the 
Service Agreement and draft Cost Allocation Manual (CAM) and are properly recorded on the books of 
the UW‐NY utilities consistent with the Uniform System of Accounts (USoA) approved by the New York 
Public Service Commission. 
6.2 Approach
To accomplish this objective, PA performed the following: 
1. Developed an understanding of the UW‐NY utilities, (defined as United Water New York and United 
Water New Rochelle/ Westchester) corporate organizational structure, accounting processes and 
systems of internal controls. 
2. Reviewed and analyzed a sample of transactions for the year ended December 31, 2014 covering all 
M&S cost streams (labor, benefits, general and administrative, fringe benefits) examining whether, 
and the extent to which, UW accounting procedures properly identify the costs related to providing 
the various services under the contract agreement and, through direct assignment or by allocation, 
charge these costs to the proper United Water affiliate(s) receiving the related service. Examine the 
sources of M&S costs to determine if adequately supported with documentation and properly 
accounted for and allocated and make recommendations to improve the traceability of transactions 
from the incurrence of charges at the M&S Company through the allocation process to a charge to a 
UW‐NY utility. 
Specific tasks performed include:  
 Documented for the year ending December 31, 2014 the major affiliate transactions to identify 
all direct and indirect affiliate transaction flows that result in amounts being recorded to the 
books of the UW‐NY utilities from UW Management and Services, Inc.  For this period, examine 
the M&S agreement and other arrangements that the UW‐NY utilities have entered into with the 
M&S Company and the related accounting procedures associated with these arrangements. 
 Confirmed the appropriateness and accuracy of loaders to direct labor to develop the fully 
loaded rate for billing purposes.  Assess whether costs included as overhead costs should have 
more properly been separately billed. 
6 ACCOUNTING AND INTERNAL
PROCESSES
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 Assessed the reasonableness of the allocation factors used.13   
 Examined the financial accounting reporting controls related to the M&S Company transactions 
and evaluate the ability of the UW‐NY Utilities to monitor the charges billed to it. Determine if 
there are appropriate controls providing periodic review and comparison of budgeted to actual 
amounts billed for services rendered to each UW‐NY utility with an explanation of variances for 
the monitoring and control the costs for each of the services provided to them by the M&S 
Company under the contracts. 
 Evaluated the accounting procedures at the M&S Company and recommend procedures to 
ensure costs allocated to affiliates are recorded to the proper UW‐NY’s Utility Uniform Systems 
of Accounts (USOA) account including controls related to lobbying, charitable contributions and 
other non‐ business costs incurred by the M&S Company are properly recorded to non‐utility 
operating accounts. 
 Evaluated whether sufficient transaction information is maintained in preparation of the bills to 
easily examine the underlying details of individual cost transactions incurred by the M&S 
Company and allocated to affiliates. 
 Evaluated the procedures for the review and approval by the UW‐NY utilities of the monthly 
M&S Company billings to determine if these procedures provide assurance that the amounts 
billed to the UW‐NY utilities are for services rendered and are reasonable, the documentation of 
the UW‐NY utilities’ monthly bill review and approval process, and accounting information 
systems and other resources available to the UW‐NY utilities to review individual line item 
charges and obtain the source documentation for such charges at the M&S Company.14 
3. Reviewed the accounting for costs allocated by UWM&S to UW‐NY for 2014. 
4. Summarized findings based on the review of the Company’s accounting and internal processes and 
suggest recommendations for improvement. 
6.3 Background
The process for generating an M&S invoice for services provided to the regulated and non‐regulated 
business units is a multi‐step process. This process is described in the “Agreement Between United 
Water Management and Services Inc. and United Water New York Inc.” (“Agreement”). 
The starting point for the M&S billing process is time reporting.  Employees charge their time based on 
guidelines that establish business as usual time‐coding for employees of the individual M&S 
departments. These time coding guidelines are based on the work performed by the departments and 
the business segments receiving (or benefiting from) the services provided.   
Next, direct labor hours are priced out using employee specific labor rates and then burdened with the 
department’s non‐labor expenses.   These non‐labor costs include fringe benefits and “general and 
administrative” costs.  General and Administrative (G&A) costs include a department’s direct expenses 

13 This subtask was completed in connection with the review of the three factor formula (Task 4) and cost allocation manual (Task 5).
14 This subtask was completed in connection with the review of internal controls (Task 2)
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for office supplies, training, travel, rent, and other non‐labor costs.  The fully loaded labor costs are 
allocated to business units based on the allocation codes used. 
Finally, loaded labor costs are allocated to individual business units using the calculated allocation 
factors, with those charges appearing individual lines on the M&S bill to the individual invoice. The 
allocation factors are calculated based on the underlying cost drivers using the methodologies defined in 
the draft CAM. 
The M&S Accounting function within the Accounting Service’s department is responsible for the 
allocation and billing process described above.  
The flowchart below illustrates the high level process used to construct the final M&S bill delivered to 
business units.
Figure 1: UW M&S Allocation Methodology

6.4 Results of Testing
Given the process used by M&S, it is not possible to follow a single receipt from the projected budget to 
a final business unit bill. Since G&A charges are based on projections, then pooled and loaded onto labor, 
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the allocated charges are not receipt driven. This is an unavoidable element of the allocation process and 
is not a unique problem in the industry. The accuracy of the final bill is therefore reliant on the processes 
and methodologies defined in the CAM and in the Agreements. 
Since a single, actualized charge cannot be followed from the charge to the final M&S bill to a business 
unit, our review focused on testing the human generated parts of system and assumptions that govern 
how M&S invoices their bill. By testing the various components of the M&S invoicing process, and 
reviewing those components for accuracy, PA was able to assess whether the allocation process is 
working according to the draft CAM and Agreements. If the components are verified, then the 
foundations of the system can then be assessed in light of common industry practices. This is the basis of 
the review performed here‐within. The overall review was performed in four parts: 
1. An review of the allocation factors and methodologies; 
2. An review of the M&S invoicing process; 
3. A review of the internal controls for billing time; and, 
4. A testing of the individual transactions calculated by the allocation system. 
The results of the reviews performed are presented in the following sections of this chapter.    
6.4.1 Allocation Factor Review
The allocation factor review was comprised of two phases. First, PA tested the calculation of the 
percentages used to allocate costs to the individual business units for each allocation factor based on the 
methodologies defined in the CAM.15 Second, PA compared the data used to develop the individual 
allocation factors by business unit (e.g., number of customers) to appropriate source documents.  
In the first phase, the procedure for determining allocations, outlined in the CAM, was compared to the 
procedure used for the 2014 allocation process for the full year. The following department types and 
respective methodologies used to allocate costs shown in the table below based on information 
provided in the CAM. 
Figure 2: Cost allocation method according the draft Cost Allocation Manual and
Agreements
Methodology Type Allocation 
A. Administrative and General (A&G) 
33 1/3% Employees 
33 1/3% Number of Customers 
33 1/3% O&M Expenses 
B. Operations and Engineering 
40% Net Utility Plant 
40% Volume of Water Delivered 
20% Fuel, Power, and Chemical Costs 

15 The allocation factors included draft Cost Allocation Manual are identical to those included in the Agreements between UWM&S
and its Affiliates.
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D. Customer Service and Communications 100% Number of Customers 
E. Human Resources & Payroll 10% Number of Employees 
F. Accounting, IT, Planning, and Treasury 100% Total Capitalization 
In detail, allocation methodologies are calculated by expressing each allocation factor as a percent of the 
total value for the whole business, then applying those percentages to the formulas in the cost allocation 
manual. For example, Administrative and General costs (defined as being comprised of the departments 
listed in the above table) are allocated with Method A – number of employees, number of customers, 
and O&M expenses. UW‐NY has roughly 5.4% of the total employees, 11.2% of the total customers, and 
5% of the total O&M costs for business units that are charged an M&S fee. Therefore they are charged 
7.38% of the M&S fees for costs classified as Administrative and General, as shown in the table below. 
Figure 3: Example Calculation – Administrative and General Allocation for UW New York
Alloc_990 # of Employees # of Customers O&M Costs 
Total All Business Units 2,005 647,153 $404,297 
00200 – (UW‐NY) 110 72,834 $21,907 
Percent of Total – UW‐NY 0.05486 0.11255 0.05419 
Weighted A&G Allocation = (0.05486*.33333)+(0.11255*.33333)+ (0.5419*.33333) = 0.073845 = 
7.3845% 
PA found that the calculations used to develop the methodologies were consistently correct across all 
months in fiscal 2014 for all billing codes. When entering the allocation factors into the software system, 
the allocations must add up to 100% across all business units that fall under alloc_990. The system 
automatically adjusts the factors for alloc_987 and alloc_988. Rounding that must take place to net the 
system input to 100% total is burdened onto the non‐regulated business segments. 
In the second phase, the allocation factor worksheets were compared to primary source documents, 
including values found in the general ledger, values reported directly by departments, and/or values as 
they appear in PSC regulatory filings. Five regulated business units and environmental services (ES) were 
tested. Those five regulated units were: 
 United Water New York; 
 United Water New Rochelle; 
 United Water Westchester; 
 United Water New Jersey; and 
 United Water Idaho. 
Environmental Services was tested as a single business unit. 
For each business unit, the allocation factor used was agreed to appropriate source documents, with the 
source documents compared among business units for consistency.  
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PA found that the draft CAM does not provide the detailed definition of each factor. Thus, follow‐up 
discussions were required to ensure a consistent method was used to calculate the allocation factors 
across regulated and non‐regulated business units. Detailed definitions for the allocation factors used 
are shown in the table below. 
Figure 4: Allocation Factor Definitions
Allocation Factor Details 
1. Number of Employees 
Net full‐time‐employees at year‐end. Interns and 
part‐time workers are not counted as an 
employee, but rather as a portion of an FTE based 
on actual hours worked. 
2. Number of Customers Billed customers at year‐end, number pulled by IT 
3. Operations & Maintenance Costs Does not include M&S fees or costs never incurred 
by a non‐regulated unit16 
4. Utility Plant, including CWIP 
Net utility plant less customer advances for 
construction and contribution in aid of 
construction 
5. Volume of Water 
Billed volume of water for general use17 and 
system use18. For Business Units providing water 
and wastewater services, volumes of wastewater 
collected/treated is assumed to equal volumes of 
water delivered. 
6. Fuel, Power, & Chemicals 
General ledger items: 50610, 50620, 50635 
(“Purchased Power”,” Other Utilities”, & 
“Chemicals”). This cost does not include 
warehousing, labor, logistics, fleet costs, etc. 
associated with the storage, use, or processing of 
fuel, power, or chemicals. 
7. Total Capitalization Total, without adjustment (sum of long‐term debt 
and equity from the balance sheet) 
The detailed allocation factors were then validated for the selected regulated business units and 
environmental services. For each of the business units selected, the data was agreed to one or more 
primary sources; that is, they were checked against the most recent PSC regulatory filings, the general 

16 Costs not incurred by non-regulated units are: Regulatory Commission Expense, Amortization of Rate Case Expense,
Amortization of Deferred Expenses, Amortization of Tank Painting, Amortization-Miscellaneous, Amortization of OPEB Costs,
Amortization of AFUDC Equity GU [Not sure what this last one is]
17 Customer classes included in general use are: Residential, Commercial, Industrial, Public Authority, Fire Protection, Other (RSL)
18 System use was not the standard used across all volume of water factors; however follow up determined that it should be the
standard across the business units.
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ledger for the business unit, and/or a direct data query to a department. These numbers were compared 
to the allocation charts, which were revised periodically throughout the year. Allocation charts were 
based on either 2013 or 2014 allocation factors. Allocation factors were used according to the following 
schedule: 
 January 
o Regulated Units: Prior calendar year’s allocation factors (2013) 
o Environmental Services: Prior calendar year’s allocation factors (2013) 
 February 
o Regulated Units: Updated 2014 factors 
o Environmental Services: Prior calendar year’s allocation factors (2013) 
 March 
o Regulated Units: Updated 2014 factors 
o Environmental Services: Updated 2014 factors 
 April‐May 
o Regulated Units: Updated 2014 factors 
o Environmental Services: Updated 2014 factors 
 June‐December 
o Regulated Units: Updated 2014 factors 
o Environmental Services: Updated 2014 factors 
The allocation factors were updated in June due to an error that started in the April allocation update. 
The allocation spreadsheets had accidently listed a business unit that was being considered for 
acquisition at the start of 2015, which added an additional 172 full time employees to the employee 
count. Due to this error, some M&S fees associated with allocation methods A and E were not charged to 
business units. For this brief period, both the regulated and non‐regulated units were undercharged. 
Beginning June, 2014, this error was rectified. 
The allocation factors were tested for the six business units across all of the allocation sheets, in all 
months.  
Included below as an example, is an excerpt from that summary of findings (UW‐NY in February): 
Figure 5: UW-NY Allocation Factor Review Summary
   Source  
Business 
Unit Month Factor 
2013 
Annual 
Report
General 
Ledger 
Dept. 
Query 
Actual Value 
Used in Tool Match? 
200‐ New 
York February # of Employees       110 110 YES 
200‐ New 
York February # of Customers       72,834 72,834 YES 
200‐ New 
York February O&M Costs 
(000’s)   21,907    21,907 YES 
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200‐ New 
York February Utility Plant 
(000’s) 363,621 363,621    336,621 NO 
200‐ New 
York February Volume of 
Water       8146 8146 YES 
200‐ New 
York February Fuel, Power, & 
Chem (000’s)   4224    4224 YES 
200‐ New 
York February Total 
Capitalization   285,764    285,764 YES 
PA identified several errors and inconsistencies in testing the allocation factor process.  The above table 
summarizes the results of the testing performed for UW‐NY: details of the individual errors found and 
related findings are discussed below.
6.4.2 Results of Testing
1. The net utility plant costs for New York were incorrectly entered into the allocation spreadsheet. The 
actual net utility plant cost, less customer advances for construction and less contribution in aid of 
construction, for New York was $363,621,457. In the cost allocation spreadsheet, this cost was 
incorrectly typed as $336,621 (000’s). Taking the month of June as an example, if the allocation 
factor has been entered correctly, New York would incur an additional 0.447% of the Engineering 
and Operations M&S costs booked to allocation code 990. 
2. Volume of water was not calculated correctly for all business units. Some units did not report water 
consumption associated with “system use” and therefore under reported their water consumption. 
The New York BUs reported this factor correctly. 
3. The allocation tools, for 2014, utilize Environmental Services’ (ES’s) “gross Non‐Utility property” 
rather than “net plant” costs for the factor “Utility Plant, including CWIP”. This is because the 
regulated units are contract services and thus comparable data was difficult to establish for this 
factor. Further, the ES segment should be reporting their net value. The gross cost for ES is greater 
than the net cost. As a result of this reporting error, the non‐regulated units received additional 
costs associated with M&S departments allocated as Engineering and Operations. 
4. The “Number of Employees” factor for the April‐December months of Environmental Services 
includes BU 463 – United Water Canada, whereas previously, the number of employees count 
excluded that business unit. The number should consistently exclude BU 463. 
5. Number of customers and volumes of water backup data could not be located for ES 2013 (allocation 
sheets for January and February). This is because an employee violated company policy by storing 
the backup data locally on their hard drive before subsequently being let go. 
6. Environmental Services did not report 50620 “Other Utilities” as part of their Fuel, Chemicals, and 
Purchased Power costs. This value was reported by the regulated units. 
7. Number of customers does not match number of meters in the PSC fillings. This is because number 
of customers is the number of billed accounts and number of meters includes all meters in the 
system. 
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8. The calculation for volume of water in environmental services relies on historical data and not actual 
data. At one point, the sum of ES, Rahway, Hoboken, and Jersey City volumes of water and 
wastewater equalled 83776. For future calculations, only Rahway, Hoboken, and Jersey City had 
known volumes of water. To adjust the volume of water calculation for all non reg, a shorthand 
workaround was developed that is mathematically inaccurate.19  
6.4.3 Invoicing Process Review
For invoicing purposes, non‐labor costs are  loaded onto labor costs and subsequently allocated (billed) 
to the business units are based on projected department spend using the annual budget as the starting 
point. Each month, department level budgets are estimated given business as usual costs and 
anticipating onetime expenses. They are then adjusted to smooth monthly variances in spending and 
structured to meet the calendar year budget target. Variance reports are developed and reviewed by 
management to explain over or under spend. In general, this form of budget management ensures that 
M&S bills can be invoiced for the same month the costs are incurred, rather than recouping actuals at a 
later time, and that invoices are relatively consistent throughout the year. However, this fundamentally 
depends on active management of these costs over the course of the year. Additionally, since the budget 
projections are based on historical trends, and not receipts for services rendered or items purchased, the 
monthly M&S bill does not reflect actual costs, but rather reflects an estimation of what costs should be. 
The management groups responsible for tracking yearly budgets are very important for truing up costs 
over the year long timeline and for adjusting for uncertainty, or large, onetime costs. 
At a detailed budgeting level, variances are both normal and expected, as projections are monitored and 
adjusted based on the expenses actually incurred throughout the year. On a whole, the actual M&S 
charges billed to the business units was about $800k less than budgeted. The table below illustrates the 
budgeted and actual costs at a high level. 
Figure 6: Overall M&S Bill
(in 000’s) Personnel Travel Outside 
Services 
Other Total 
Gross 
Capitalization M&S 
Billed Fee 
Budget $52,494 $2,779 $5,841 $6,667 $67,780 20.6% $53,841 
Actual $51,265 $2,195 $5,375 $7,000 $65,835 19.4% $53,037 
Net $1,229 $584 $466 ($334) $1,945 (1.2%) $804 
Since monthly invoices are based on actual labor costs plus projected non‐labor expenses, we could not 
tie‐in and test actual monthly non‐labor charges to the supporting detail.  As a result, since amounts 
invoiced are trued‐up to actual expenses by year‐end, our approach included a review of actual 
expenditures throughout 2014 for selected departments.   

19 The shorthand for calculating ES volume of water and wastewater is (83776 – Current Rahway – Current Hoboken – Current
Jersey City). This automatically deflates the ES value by the exact same amount as the other units increase each year. The excel
formula used to generate this number was incorrectly applied, with the function drawing from a blank box. If the function had been
accurate the final ES water number would remain 83776 every year.
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The first step of our review was to confirm that actual expenditures for the year matched the amounts 
billed. Next, for selected departments, we reviewed a sample of expenditures to confirm the 
reasonableness of those costs related to the services provided by the departments selected. To obtain 
our sample, PA viewed the 2014 detailed actuals reports for budget items that stood out as abnormally 
high, abnormally low, or with significant variance from year end expectations with a focus on outside 
services.  The 24 departments and subaccounts shown in the table below were selected for review. 
Figure 7: Subaccounts Reviewed
M&S BU DEPT DEPT NAME SUB 
ACCT 
ACCT DESCRIPTION 
305 400 Administration General 50100 Supervisory labor 
305 410 Corporate Office Support 91350 Outside service ‐ other 
305 435 Commercial Development 90600 Travel expense 
987 455 Customer Care 91300 Outside service ‐ temp help 
305 205 Engineering 99085 CCB Support 
305 210 Environmental Health & Safety 50650 Meals 
987 401 Office of the COO 90500 Club and professional dues 
305 415 Human Resources 92350 Corporate initiatives 
305 415 Human Resources 91350 Outside service ‐ other 
305 530 Financial Planning ‐ ES 91350 Outside service ‐ other 
305 530 Financial Planning ‐ Reg. 50600 Rents 
305 530 Financial Planning ‐ Corp 99084 Non Expense 
305 530 Financial Planning ‐ Corp 50600 Rents 
988 530 Financial Planning ‐ Corp 91350 Outside service ‐ other 
305 500 General Accounting ‐ Corp 91350 Outside service ‐ other 
305 500 General Accounting ‐ Corp 91300 Outside service ‐ temp help 
987 425 IT 99084 Non Expense 
987 425 IT 91350 Outside service ‐ other 
987 460 Revenue Management 91700 Employee group health & life 
987 460 Revenue Management 50120 Supervisory labor trans out 
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987 460 Revenue Management 50100 Supervisory labor 
305 705 External Affairs 91350 Outside service ‐ other 
305 405 Corporate Comm. 91860 Other Awards 
305 405 Corporate Comm. 92150 Staff mtgs, conf's & seminars 

PA reviewed the supporting documentation for 24 budget items and found that the detailed subaccount 
charges generally matched the total actual charges for the year. In a few cases, the actuals did not match 
because the sample that was selected included proxy accounts. Some subaccounts are used as a tracking 
tool for CC&B, Capitalized, and Non‐Expensed charges and have no actuals to report. Conceptually, these 
subaccounts track net costs associated with activities not recoverable by a business unit through the 
allocation process. For example, work done for the parent company would not be recoverable in M&S 
bills. As a result, the overhead that is loaded onto labor and allocated to the parent company will be 
totaled within subaccount 99084: Non‐Expense. 
PA reviewed the detailed subaccount information for significant variances between budgeted and actual 
expenditures, transactions that were exceptionally large, and transactions that had no obvious 
supporting detail. In all a few transactions stood out. They were: 
Figure 8: Exceptional Transactions
Reason Dept MS BU Date Cost Sub Acct Description 
Travel 435 00305 6/26/2014 $8022.10 90600 UNITED AIRLINES|4187000028‐061 
Meals 210 00305 1/24/2014 $1291.16 50650 BANK OF AMERICA PURCHASING CAR
A follow up on these two charges revealed that the travel expense for department 435, Business 
Development, was a 4‐segment international round‐trip ticket for meetings with United Water’s parent 
company management. Business Development expenses are not billed to the regulated segment so UW‐
NY and UWNR/W did not receive an allocated portion of this expense. The meals expense was a holiday 
dinner for 15 people at Park Steakhouse in Park Ridge, NJ on Wednesday 12/11/13 for the 
Environmental, Health and Safety department. Both charges were backed by supporting documentation. 
The holiday dinner was approved by Treasury. 
6.4.4 Review of Time Coding Controls
Coding time according to the work done by an employee is important for the proper allocation of costs 
to business units. United Water’s internal control for coding time is based on two primary means: one, 
providing specific guidance for each department, and two, only allowing a few time reporting codes to 
be available to employees.  M&S employee bi‐weekly time reports are not subject to supervisory review 
and approval at the time of submission. 
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At the employee level, the allocation of an employee’s net M&S fee is determined by the allocation code 
that employees bill their time to. The indirect allocation codes that appear on the M&S bill to regulated 
business units are shown in the table below. 
Figure 9: Allocation Code Descriptions
Alloc Business Units Charged 
990 All regulated and non‐regulated business units  
940 Regulated Utilities 
945 Consolidated Regulated Segment 
In addition to these allocation codes, employees who appear on the final UW‐NY M&S bill can also direct 
bill their time, allocate to a non‐expensed account, or capitalize their time. PA compared the actual 
allocation of time for a sample of departments to the time coding instructions issued in 2014. The codes 
available to book to were preselected for employees, so all allocated time is booked to the available 
codes. 
Memos sent to the departments in January of 2014 outline the specifics for time coding. Below is a 
sample excerpt from one of these time coding memos.     
”… 
1. …You are limited to the following Project IDs:
- OVERHEAD_305 for Capex related charges
- ALLOC_990_305 for Opex related charges

2. Based upon a high level review of your department’s activities, we believe that
you should charge 6 hours per week (15%) to OVERHEAD_305 and 34 hours per
week (85%) to ALLOC_990_305…

…” 
In order to identify departments that consistently coded their time much differently than expected in a 
business as usual setting, the projected rate of time not allocated was compared to actual capitalization 
rates for 2014. Overall 34 departments were selected across M&S 305, 987, and 988.  
Figure 10: Proposed vs. Actual Capitalization
  Actuals Memos 

Department Gross M&S 
Actual 
Cap.  
Proposed 
Cap.  Difference Fav/(Unfav) 
305 Environmental Health & 
Safety $1,308,415 9.763% 15.00% ‐5.24% ($68,518) 
305 Internal Audit $811,766 0.000% 0.00% 0.00% $0.00 
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305 Procurement $2,129,568 29.627% 30.00% ‐0.37% ($7,951) 
305 General Accounting $4,766,963 16.352% 15.00% 1.35% $64,449 
305 Accounts Payable $694,509 14.471% 15.00% ‐0.53% ($3,675) 
305 UWM&S Payroll $867,908.76 15.604% 15.00% 0.60% $5,243 
305 Financial Planning $2,494,647.37 21.796% 15.00% 6.80% $169,539 
PA found that the capitalized time and associated non‐labor expenses were relatively similar for most 
departments. Small variances are often a product of employee code selection – employees bill their 
hours to match the work they perform and this does not always match the business as usual scenario 
outlined in the memos. The department with the greatest variance was 305 Taxes. Taxes capitalized over 
40% of their gross M&S bill. The time coding memo for the department, suggested that 15% of their time 
that is not directly billed to a business unit, should be booked as overhead. This larger variance was 
unique and is a result of the department’s work on capital projects. The department billed their time 
directly to capitalization at a high rate in 2014. This fact actually decreased the burden of cost allocated 
to business units, including UW‐NY. 
Overall, 19.4% of the gross M&S bill was capitalized. This was 1.2% less than budgeted for calendar year 
2014. For M&S Departments 305 and 987, the departments who appear on M&S invoices to regulated 
units, United Water budgeted that 22.9% of their gross M&S bill be capitalized, and 21.5% of their gross 
M&S bill was actually capitalized.  While capitalization rates overall were very slightly under what was 
expected, this could be due to several reasons. For example, an employee may have direct billed more 
time than expected to a single business unit, they may have been working with customer care and 
billing, they may have allocated their time to Suez, the parent company, or they could have under 
allocated their time. 
As the reported variance is a reflection of many possible mechanisms, including employee’s working 
schedule, and M&S employee bi‐weekly time reports are not subject to supervisory review and approval 
at the time of submission, it is not possible to validate that time was booked in absolute congruence with 
work performed. However, at the overall and at the department levels, capitalized rates were similar to 
expectations and to the billing standards set out in the time coding memos. 
6.4.5 Transaction Testing
The transaction testing portion of this review evaluated the internal billing system’s allocation of fully 
loaded labor costs, including fringe and general & administrative (G&A), across the regulated and non‐
regulated business units. The transaction testing consisted of two major components. First, PA tested 
that the correct allocation methodologies were used within the M&S Invoicing system; second, PA tested 
that the total M&S bill for each employee was distributed to the business units with the correct math 
and factors. 
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To test this, one‐hundred individual transactions were selected at random20. A transaction, for the 
purpose of testing, was defined as the invoice of a single person, in a single month, attributed to a 
specific allocation code. For example, a single transaction could be, “employee A’s charge to United 
Water Westchester under Alloc_305_990 in January.” This is the level of detail that appears on an 
invoice to each business unit. Across United Water Westchester, United Water New York, and United 
Water New Rochelle, there were 7524 individual transactions in 2014. 
In the first phase, the final allocation percentages calculated in the allocation factor review were tested 
against a sample of one hundred detailed transactions to ensure that they matched the allocations used 
in the billing system. For the sample, a variance between the calculated and the actual value was 
reported and variances that appeared greater than rounding errors were investigated (net variance > 
0.00050). The following variances did not have matching values: 
Figure 11: Sample with Unmatched Allocations
 Month Dept.Function Name 
1. September 610 Legal Redacted 
2. January 610 Legal Redacted 
3. September 210 Environmental Health & Safety Redacted 
Each of the three charges that did not match their allocation was investigated to explain the variance. It 
was found that the allocation factors are rounded at two separate points in time. The first is when the 
allocation factors are manually calculated. In order for the allocation system to accept a manual entry, 
the total percentages must add up to 100%. Any rounding that has to occur is transferred to ES. The 
second rounding happens by the internal allocation system. Only allocations for code 990 are entered 
into the system. The system then automatically removes business units and calculated allocations 940 
and 950. Rounding may also occur in the internal system at this point. Variances are within the accepted 
thresholds to be explained by those rounding mechanisms. 
In addition to confirming that the allocation methodologies matched the methods defined in the 
Agreement, PA also tested that the system calculated the charges correctly using the reported 
allocations. This consisted of replicating the calculations done by the internal system. In all, PA found 
that the allocation process accurately allocated costs according to the allocation codes billed within the 
M&S system for all 100 transactions.  
The process for testing this was as follows: the business unit level charge for a single person was divided 
by the allocation factor assigned to that business unit and allocation code to reconstruct the total 

20 Every eligible transaction in 2014 was assigned a number between 1 and 7524. 100 transactions were selected using a random
number generating method. The random number was generated using the excel function =TRUNC(RAND()*(2635-1)+1). According
to Microsoft, the RAND function "returns an evenly distributed number greater than or equal to 0 and less than 1". By adjusting this
normalized number by the total entries in the 2014 data set, the function returns a random number between (0,7524). PA believes
this method is sufficiently random for generating a sample.
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monthly M&S fee of a single person. This M&S fee was compared to the actual M&S fee billed for that 
employee and a variance was calculated. Because the total M&S fee of an individual includes fringe, 
G&A, and labor costs, if the business unit bill was allocated correctly, as a percentage of the total bill, it 
verifies that all three components of the loaded labor charge were allocated correctly. Only one 
reconstructed transaction had a significant variance that could not be explained by rounding. This single 
outlier was a result of the accounting process used to restructure departments in January of 2014. The 
variance was adequately accounted for by the individual’s fee charged under their new department title. 
The restructuring that occurred in January of that year was accounted for by distributing a single 
employee’s total bill across two separate transactions in the same month. The figure below illustrates an 
example of the testing process for an employee in Legal (987) and an employee in IT – Service Delivery 
(305).  
Figure 12: M&S Transaction Testing
Billed 
Month 
Department 
Name Name M&S BU 
Bill 
Alloc 
Used 
Estimated 
M&S Fee 
Based on 
Factor 
Actual 
M&S fee 
for 
employee 
Variance 
September Legal Redacted $1,389.00 0.0761 $18,252.30 $18,258.00 $5.70 
November IT – Service 
Delivery Redacted $197.00 0.0958 $2056.37 $2054.00 ($2.37) 
6.5 Findings
1. The results of transaction testing found the mechanics of the allocation process are working as 
designed. 
2. The testing of the allocation factors themselves found some errors and inconsistencies, in part 
attributable to differences between the operations of the regulated and non‐regulated segments 
and in part due to a lack of standardization and automation which likely resulted in fewer costs being 
allocated to UW‐NY in 2014. 
3. The efficiency and effectiveness of the allocation factor processes could benefit from further 
standardization. 
a. There is not a single data source or information repository for tracking and generating 
allocation factors across all of the BUs. Each year, generating and validating the 
allocation factors is done by compiling information from several different sources. In 
some rare cases, factors had to be estimated21. This leaves UW susceptible to mistakes. 
For example ES’s fuel, power, and chemicals factor did not include a subaccount that 
was used among the other BUs. 
b. Since the regulated and non‐regulated units provide a somewhat different composition 
of services, comparable factors are difficult to generate. For example: 

21 E.g. ES Volume of Water
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- Environmental Services does not have a Net Utility Plant cost associated with 
them, thus Net Non‐Utility Plant was utilized as a close substitute. 
- O&M costs had to be adjusted for costs never incurred by a non‐regulated unit, 
which limits the ability to do a direct comparison to regulatory filings. 
c. Standardization is important for ensuring that the process remains consistent between 
time periods. 
- Significant employee turnover can result in the loss of institutional knowledge. 
Factors can change slightly depending on the employee responsible. In one case, 
historical data could not even be accessed.22 
4. There are opportunities for improving internal controls related to the allocation process. 
a. There is not a standard review of employee time cards after they have been submitted. 
The memos, which guide employee business‐as‐usual, time coding, do not ensure 
correct time coding, but rather inform employees. As there is no review, incorrect time 
coding can happen. For example, employees from department 460 billed their time to 
the incorrect allocation code at the end of 2014, which required extensive manual 
adjustment in December of 2014 to revise payroll charges to the business units. This 
mistake was substantial, and identified in a later variance analysis. 
b. Detailed definitions of the allocation factors are not outlined in the cost allocation 
manual, adjustments and alignment of the factors are management decisions. Internal 
review of the allocation factors is not standard, although factors are only updated a 
couple times a year. 
5. The process could benefit from reduced complexity, which in turn would improve the traceability of 
the costs billed to the BU level. 
a. Rather than allocate all actual costs by department each month, the M&S Accounting 
function uses a “pooling and projecting” approach to more levelize allocations on a 
month‐to‐month basis while still achieving the result that all department expenses are 
allocated by year‐end.   While this approach may make sense from a management 
perspective in avoiding large fluctuations in costs from month to month, the process is 
reliant on human judgement and is a less efficient process.   In addition, the use of 
projected expense data makes it nearly impossible to track costs in the final bill. 
b. The complexity of the allocation process results in bills to affiliates which are difficult to 
meaningfully review from an internal control perspective.   
- Since costs are based on projections and pooled before loading onto labor, it is 
very difficult and time consuming to audit a single transaction.  

22 This issue was the result of an employee violating company policy. This individual is no longer employed by UW M&S
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- Any audit of the charges must rely on fundamental assumptions about the veracity 
of the process because rather than the ability to confirm on a month‐by‐month 
basis that specific non‐labor charges were accurately reflected in the monthly bill. 
c. Documentation to support the content of the allocation factors is not a formal process. 
Sources for various data are many across the M&S function. It is not easy to source the 
allocation factors and not easy for the BUs to see how their allocation factors affect the 
final M&S bill. 
d. There are several layers of allocation factor rounding, done both by management and by 
the allocation software, so small differences are found. 
e. When employees change departments, costs are accurately accounted for in the M&S 
bill. However, a single employee may bill their time under multiple department names in 
a single month and will be assigned varying overhead costs, which can cause confusion. 
6. Amounts are charged to the appropriate accounts consistent with the Uniform System of Accounts 
adopted by the New York Public Service Commission.  
a. PA reviewed the accounting for charges billed by M&S (including corporate assumptions) 
to UW‐NY by NARUC account in total for 2014.  All M&S costs invoiced were recorded in 
account 923, “Outside Professional Services,” a common practice in the utility industry.   
b. Costs billed through the corporate assumptions process were billed to the appropriate 
accounts; for example, benefits were charged to account 926, insurance costs were 
charged to account 924, and CC&B costs were charged account 903. 
c. While the complexity of the M&S billing process makes it very difficult to review billing 
detail to ensure that costs properly recorded below‐the‐line are not recorded above‐the‐
line, reasonable controls exist to ensure that “potentially below‐the‐line” costs are not 
billed to the regulated business segments.    
6.6 Recommendations
Several other chapters in this report address issues related to the findings in this chapter.  See Chapter 3, 
Internal Controls, for recommendations related to improving the system of internal controls. See Chapter 
5, Three Factor Methodology, for recommendations related to the use of a general allocator; and see 
Chapter 8, Cost Allocation Manual, for recommendations related to allocation factors.  A few additional, 
specific recommendations follow. 
1. Improve the standardization and documentation of data sources used to develop the allocation 
factors used to reduce the risk and mistakes associated with communication. 
2. Establish detailed definitions for allocation factors and establish a standard method of documenting 
evidence for each allocation factor. 
3. Align allocation factors to regulatory fillings to reduce communication issues and increase 
traceability and perceived transparency. 
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4. Allocation factors should be comparable across multiple business types, and not dependent on the 
composition of the business unit’s services. 
5. Set up a standard review of department level time coding to ensure that M&S employees are billing 
in congruence with work performed. 
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7.1 Background and Objective
M&S uses a three‐factor methodology comprised of an equal weighting of: number of employees, 
number of customers served and O&M expense level ("three factor methodology") to allocate costs of 
the M&S departments shown in the table below to the business units.  In some instances, these costs are 
allocated across all business segments (referred to as “corporate”); in other instances, the three factor 
methodology is used to allocate departmental expenses among only the regulated affiliates or among 
only the non‐regulated affiliates. The departmental costs allocated are the costs remaining after costs 
have been direct charged, capitalized, or charged to other balance sheet accounts.  The business unit 
numbers and allocation codes in the table below indicate whether costs are allocated to all, regulated 
only, or non‐regulated business segments.23 
Department 
Number 
Business 
Unit 
Number 
Department Name Allocation Code 
400 305 Administration General 99024 
401 305 Office of the COO ‐ Corporate 990 
401 987 Office of the COO ‐ Reg 94025 
401 988 Office of the COO ‐ Non Reg 95026 
435 305 Commercial Development NREGOP_61427 
445 305 Procurement 990 
610 305 Legal ‐ Corporate 990  

23 PA’s transaction testing confirmed that the allocation methods are working as designed.
24 Code 990 indicates that costs are allocated among all affiliates.
25 Code 940 indicates that costs are allocated only to business units within the regulated segment.
26 Code 950 indicates that costs are allocated only to business units within the regulated segment.
27 This code indicates that costs are allocated only to non-regulated operations. Commercial Development is also referred to as
Business Development.
7 THREE FACTOR METHODOLOGY
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610 987 Legal ‐ Reg 940 
610 988 Legal ‐ Non Reg 950 

There was a significant discussion in the Order and testimony regarding the Company’s three factor 
methodology (commonly referred to as a “general allocator”).  Specifically, Commission Staff questioned 
whether the use of “Number of Customers” results in an over‐allocation of costs to the regulated New 
York utilities as a result of under‐allocating costs to certain non‐regulated businesses.  The June 2014 
Order requires this study to address the appropriateness of the continued application of the current 
three factor methodology to regulated affiliates, including an assessment of the impact of any mis‐
allocation for the last 3 years. 
The objective of this task is to address the equitability of the continued application of the current three 
factor methodology to regulated affiliates, over the last 3 years. 
7.2 Approach
The three factor methodology used by M&S is a form of general allocator.   General allocators are 
commonly used to allocate costs which cannot be direct charged or allocated based on cost causative 
allocation factors. 
PA reviewed the use of the three factor allocator for consistency with common accepted uses of general 
allocators in the utility industry.  This included a review of the appropriateness of the services allocated 
using this factor as well as the appropriateness of the components of the allocator. 
PA assessed whether M&S’s use of its current three‐factor general allocator is consistent with the 
following guiding principles.   These principles are based accepted industry practices and guidance 
provided by regulatory agencies.  
 The components of the general allocator should impartially and fairly reflect the level of effort and 
costs required to support each of the operating companies;  
 The underlying calculation used to support the components of the general allocator should be as 
transparent as possible (i.e., based as directly as possible on published information); and, 
 The underlying calculation should not vary significantly from period to period based on factors 
considered to be “non‐controllable.” 
In performing this assessment, PA compared M&S’s practices to other representative utilities in North 
America.   
Based on a recent PA study, the most common general allocator used in the utility industry is the 
Massachusetts Formula (MF) or variations of the Massachusetts Formula commonly referred to as the 
Modified Massachusetts Formula (MMF).  
The Massachusetts Formula consists of Plant, Revenues, and Labor, equally weighted; however, “Plant”, 
“Revenues”, “Labor” are not specifically defined.   As a result of the lack of specific, authoritative 
guidance on the specific definitions of these three components, we found that variations have emerged 
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over time among utilities claiming to use the MF. For example, revenues may be defined as top line 
revenues from the income statement or as gross margins; plant may be defined as utility plant or as total 
assets; and labor may be defined as headcount or as payroll dollars.  But in all cases, the variations are 
sufficiently minor to still be considered as Massachusetts Formulas. 
Similar to the Massachusetts Formula, there are a number of Modified Massachusetts Formulas in place, 
usually with equally weighted component allocation factors, but the components differ somewhat from 
the Massachusetts Formula.  
Following is a list of general allocators used in the utility industry.  Please note that the calculation of the 
general allocator formulas are typically tailored based on the specific set of affiliates receiving or 
benefiting from the services provided.  For a Holding Company with many regulated and non‐regulated 
subsidiaries operating in various jurisdictions, the general allocator formulas are tailored to include only 
those affiliates receiving or benefiting from the services provided.   While the general formula remains 
unchanged, a single Holding Company may have a dozen or more variations of the general allocator 
formula depending on the affiliates receiving or benefiting from the service provided. 
Nationwide, the following companies use the Massachusetts Formula as their general allocator.   
Utility/Holding Company State General Allocator Formula 
AEP Multiple States Total Assets, Number of Employees, and
Number of Electric Retail Customers
(this is AEP’s most commonly used
functional allocator)
American Water Multiple States (including New
York)
Operating Revenue, Net PPE,
Employees
Black Hills South Dakota, Wyoming,
Montana, Colorado, Iowa,
Kansas, Nebraska
Asset Cost, Payroll, Gross Margin
CenterPoint Energy Texas, Louisiana, Minnesota,
Mississippi, Oklahoma
Asset Cost {40%}, Headcount {20%},
Gross Margin {40%}
ConEd New York Average of Revenues, Assets, and Labor
Costs
Duke Energy Indiana, North Carolina, Ohio,
Kentucky, South Carolina
Gross Margin, Net PPE, Payroll
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Iberdrola New York (RG&E, NYSEG) and
Maine (CMP)
Operating Revenue, Net PPE, Payroll
Great Plains Energy
(Kansas City Power &
Light)
Missouri, Kansas Operating Revenue, Net PPE,
Employees
Unitil Massachusetts (FG&E, New
Hampshire, and Maine
Labor, Revenue, Plant
Xcel Minnesota, Colorado, Texas,
Michigan, Minnesota, New
Mexico, North Dakota, South
Dakota, Wisconsin
Average of Revenue, Employee, and
Total Asset Ratios

The Modified Massachusetts Formula is also commonly used as shown in the table below. 
Utility/Holding Company State General Allocator Formula
Ameren Illinois and Missouri Use an “Executive Allocator” which
includes: Total Capitalization, Total
Assets, Sales Volumes
First Energy Ohio, Pennsylvania and
New Jersey
Initial allocation is based on FE’s Equity
investments in affiliates.
For allocations across subsidiaries FE use
Gross T&D Plant, O&M Expense, and
T&D Revenues.
NiSource Indiana , Kentucky and
Ohio
Total Plant, State Employees and
Customers
PPL (not including
LG&E/KU)
Pennsylvania Average invested capital, O&M, and
number of employees of subsidiaries.
Progress Energy North Carolina, South
Carolina, Florida
Revenue, Asset, and Operating Expense
Ratios
PSE&G New Jersey Revenue, Earnings, and CapEx
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Southern Company Georgia, Alabama,
Mississippi, Florida
Net Fixed Assets, Operating Expenses,
Operating Revenues.

Companies have also developed other formulas which they believe meet specific needs. For example: 
Utility/Holding Company State General Allocator Formula
Alliant Energy Wisconsin, Iowa, Minnesota General Ratio based on the sum of all
Service Company expenses directly
assigned or allocated.
Numerator is the Client Company
Denominator is all Client Companies
and/or the Service Company.
Central Hudson New York Net Assets and Number of Employees
Constellation Energy Maryland (BG&E) Total Corporate Assets, Equity, Employees
and Gross Margin
Entergy Louisiana, Texas,
Arkansas, Mississippi
Employees and Total Amount Billed
(Complete allocation factors, not just
residuals)
EPCOR Edmonton, Alberta, Canada Total Annual Revenue, Total Net Assets,
Total Annual CapEx, Average Number of
FTE’s
Exelon Illinois (Commonwealth
Edison), Pennsylvania
(PECO)
Total Average Assets and 12 months
Gross Payroll.
Integrys Energy Wisconsin (Wisconsin
Public Service), Illinois
(Peoples Gas), Minnesota
and Michigan
Two-part formula: Total Assets and Total
Non-Fuel O&M
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Utility/Holding Company State General Allocator Formula
E.On (pre-acquisition by
PPL)
Kentucky (LG&E and KU) Revenue, Total Assets, Number of
Employees and Direct Expense Ratios
(used for cash management and
investment).
Other ratios are also used
Northeast Utilities Connecticut (CL&P),
Massachusetts and New
Hampshire
Gross Plant and Net Income
NStar Massachusetts A number of allocation methodologies
including: Number of Customers, Operating
Revenue, Avg. Capitalization. Also,
Operating Revenues and Capitalization
PNM Resources, Inc. New Mexico, Texas Pro-Rata distribution and Transactional
allocations
Southern California
Edison
California Operating Revenues, Operating Expenses,
Number of Employees, and Total Assets
Some governance costs are allocated
based on Equity Investment and Advances.

7.3 Findings
1. The Agreement Between United Water Management & Services Inc. and United Water New York 
Inc., which specifies the use of the three factor methodology as currently used, is dated October 20, 
1995.   The  Agreement specifies that this methodology be used to allocate Administrative, 
Purchasing, Insurance and General Services.  
2. M&S’s use of a three factor methodology (or general allocator) to allocate the cost of the following 
services is reasonable when coupled with the direct charging of costs benefiting specific business 
units: 
a. Executive‐level services; that is, the CEO and office of the COO; 
b. Legal (i.e., for legal services which cannot be direct charged to an affiliate); 
c. Business Development (no business development costs were allocated to the regulated 
segment in 2014 as a policy decision); and, 
d. Procurement. 
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3. The individual components used in M&S’s three factor methodology do not best reflect the 
underlying cost drivers as compared to commonly accepted industry practices as discussed above. 
a. One of the three components should reflect investment requirements such as Gross or Net 
Plant or Capitalization. 
b. Number of customers is not reflective of cost causation for non‐regulated contracts in which 
UW affiliates do not provide meter reading and/or billing services. This represents a majority 
of the individual contracts. A reasonable alternative would be “revenues” or “gross margin.” 
c. Commonly accepted practices suggest that either “payroll,” “number of employees” or 
“operating expenses” would be a reasonable third component, but not two of the three. 
4. It is a common practice in the North American utility industry to use the general allocator to 
apportion costs among affiliates for functions providing “governance, general corporate support 
services or business sustainability” services.  These services may include, but are  not limited to: 
a. Executives 
b. Director fees 
c. Corporate and management accounting 
d. Risk management 
e. Investor relations 
f. Corporate secretary 
g. Corporate communications 
h. SOX/Internal controls 
i. Internal audit (when not direct charged) 
5. Strategic planning is performed within the Commercial Development function (also referred to as 
Business Development).  The cost of strategic planning is not currently allocated to the regulated 
affiliates. 
6. While UW does not currently allocate the Suez Environmental management fee to the regulated and 
non‐regulated segments, it is likely that some corporate services represented by the management 
fee are commonly allocated in the utility industry using a general allocator.  
7. Company management has indicated that it has started a process to update its cost allocation 
practices and the related affiliate agreements. This update is being coordinated with the upgrade to 
the PeopleSoft ERP which is currently underway. 

7.4 Recommendations
1. The components of M&S’s current three factor methodology should be changed to better reflect 
common utility industry practices for the use of general allocators as discussed above. 
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2. To the extent possible, the components should reflect readily available data and match public 
documents such as the Annual Reports file with the State utility regulatory commissions.    
3. The three factor methodology should also be comprised of components that better reflect cost 
drivers of the Company’s current business model.  For example, the Company should consider the 
following; however, this list is not intended to represent all possible options.  
Current Number of Employees Number of Customers O&M Expenses 
Proposed 
(select one from each 
column) 
 Operating expenses 
 # of Employees 
 Payroll Dollars 
 Operating Revenues 
 Gross Margin 
 Gross Plant 
 Net Plant 
 Net Assets 
 Total Capitalization 
a. The use of Operating Expenses rather than Number of Employees typically better represents 
an operating environment characterized by the use of subcontractors.  If  used, Operating 
Expenses should not include the cost of allocated or direct charged M&S fees. 
b. The use of Operating Revenues or Gross Margin eliminates the regulatory concerns 
associated with # of Customers.  Gross Margin is simply Operating Revenues less the Cost of 
Purchased Water.   
c. The use of Number of Customers should be retained as the allocation factor for Customer 
Care, Revenue Management and Customer Care and Billing (CC&B) system costs.  
d. The Net Plant component of the allocation factor used to allocate Operations and 
Engineering costs is calculated as Utility Plant (or Non‐utility Plant in the case of the non‐
regulated affiliates) including CWIP less accumulated depreciation and Customer Advances 
and Customer Contributions in Aid of Construction.     
4. There are a number of M&S functional areas where replacing the current allocation factor with a 
general allocator, utilizing the suggested components in item 3 above, would both simplify the 
overall process as well as improve the cost causality of the allocation basis.   
a. Consider using a general allocator using suggested components in item 3 above to apportion 
both Operations and Engineering and Accounting, Finance and IT departmental expenses.   
b. Departments that currently capitalize their costs should continue to charge the construction 
overhead (e.g., Engineering). 
c. Employees in Fixed Asset Accounting (Property Accounting) should charge all of their time to 
the construction overhead code; currently the work performed by Fixed Asset Accounting is 
taken into consideration when establishing an average percentage to be used by all 
Accounting Services department employees for capitalization purposes.   
d. UWM&S should consider apportioning strategic planning services to both regulated and non‐
regulated business units using a general allocator.  Strategic Planning costs are not currently 
allocated to the regulated and non‐regulated business segments.
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8.1 Background and Objective
The Company drafted a United Water Management & Services, Inc. (M&S) Cost Allocation Manual (CAM) 
in response to an order from the Arkansas Public Service Commission (APSC).  The Company’s regulated 
water utility businesses in Arkansas were sold subsequent to the issuance of the APSC order; the CAM 
was never filed for approval and remains a draft document.     The draft CAM, which was published 
internally in May 2012, was developed by the M&S Regulatory Business Department. 
The CAM has never been made final and has not been updated since its publication in 2012; no 
organization has been assigned responsibility for maintaining the CAM. 
The objective of this task is to examine the draft M&S CAM and provide recommended changes where 
appropriate. 

The CAM includes the following sections based on its table of contents. 
Section Heading Description 
Introduction Provides an overview of the services provided, the purpose of 
the CAM, and the mission statement of M&S. 
Corporate Structure Describes the three primary divisions within United Water, Inc. 
Shared Services Describes the shared services offered by M&S, by department. 
Direct vs. Indirect Costs 
Provides definitions of direct and indirect costs, and briefly 
describes the process for assigning costs to the operating 
companies under both approaches. 
Assigning M&S Costs 
Provides brief descriptions of the process for allocating 
overhead costs; the three M&S business units, and the M&S 
billing system. 
Cost Allocation Methodology 
Describes the allocation level codes, provides as allocation 
level code diagram, and briefly describes the five operating 
categories used to allocate indirect costs. 
Allocation Factors Briefly describes the allocation factors used. 
8 COST ALLOCATION MANUAL
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Allocation Method 
For each allocation factor, describes the allocation method 
used.  Includes an (outdated) example of the inputs used to 
calculate the allocation factors. 
In addition, United Water has a document entitled “United Water M&S: Value Added Assessment 
Catalog” dated March 2007. This document includes the M&S mission statement, departmental roles 
and responsibilities, and the M&S allocation methodology.  While this document has not been updated 
to reflect the current organizational structure, its contents are consistent with those commonly included 
in a Cost Allocation Manual and the description of the M&S allocation methodology is more complete 
than the description included in the 2012 draft CAM.  
In addition, the Agreements in place between United Water Management & Services and the individual 
regulated water companies contain elements of a CAM including descriptions of the services offered and 
allocation methodologies to be used.  
Neither the Value Added Assessment Catalog nor the Agreements fully reflect current allocation policies 
and practices. 
8.2 Approach
Cost allocation manuals are commonly used in the United States utility industry to document policies 
and practices and provide guidance related to the charging and allocation of corporate and shared 
services costs among affiliate companies.   In addition, the National Association of Regulated Utility 
Commissioners (NARUC) has provided guidance on cost allocation practices.  CAM’s are often filed with 
the utility regulatory commissions in the States in which a utility operates or included as part of a utility’s 
general rate case filing.   
PA compared the M&S CAM used in the North American utility industry and guidance provided by the 
NARUC.   The findings of this review are presented below. 
Our approach specifically included the following steps. 
 Reviewed the draft UW M&S Cost Allocation Manual; 
 Assessed practices for maintaining the CAM and whether the CAM reflects current 
circumstances and practices; 
 Assessed the adequacy of the detail and guidance included in the CAM based on commonly 
accepted industry practices, including the scope of transactions included in the CAM; 
 Assessed the adequacy of employee training on cost allocation practices as described in the 
CAM; 
 Assessed the overall system of cost allocations for reasonableness compared to commonly 
accepted industry practices and specific UW circumstances.  This included practices for direct 
charging vs allocations as well as the specific allocation factors used; and,  
 Provided recommended changes where appropriate. 

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8.3 Findings
1. The CAM is an incomplete draft document and does not have the same weight as a formal corporate 
policy; that is, the document is not generally acknowledged as a source of guidance to employees.   
2. Consequently, employees are not periodically trained on the policies and practices included in the 
CAM, and it is unlikely that M&S employees are familiar with the CAM in its draft form or turn to it 
for guidance. 
a. For most employees, the relevant guidance relates to how to report their time and this 
guidance was provided on a department by department basis in connection with the issuance 
of the time reporting guidance letters in early 2014. 
b. Instructions of how to report time are not formally embedded in practices associated new 
hires and also departmental changes due to internal reorganizations. 
3. The framework of the draft CAM is reasonably consistent with industry practices. 
a. Provides a description (albeit brief) of the process whereby certain M&S operating expenses 
are allocated to affiliates.   
b. Briefly describes the services provided by M&S.  
c. Briefly describes the appropriate use of direct charging.  
4. However, there are many components of a cost allocation manual which are not included in the 
draft CAM.  The draft CAM does not:  
a. Fully describe the principles underlying the Company’s cost allocation practices.   These 
principles include cost causality, consistency, fairness and efficiency. 
b. Include descriptions of the process used to apportion non‐labor costs related to M&S functions 
which are not budgeted by M&S departments.  The process used to apportion these costs to 
both M&S and its affiliates is referred to as “Corporate Assumptions.”  
c. Describe practices for direct charging certain non‐labor costs associated with activities 
performed by M&S employees to the business units. 
 Describe practices for allocating the construction overhead component of M&S departmental 
costs (often referred to as “Capitalized A&G”) to the business units. 
 Describe the costs which are not charged or allocated to the regulated and non‐regulated 
business segments. Some of the costs not allocated are native to M&S (referred to as “non‐
expense” costs); others remain on the books of the parent company (including Suez 
management fees). 
 Describe the current two‐step process for allocating General Administrative costs (Department 
950 costs). 
 Describe corporate costs which are not budgeted by M&S and which are retained at 
“corporate.” 
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 Describe policies and practices related to allocating costs related to the Customer Care and 
Billing (CC&B) process.   
 Describe how capitalized costs, non‐expenses and CC&B costs are excluded from those M&S 
department expenses allocated using the process described in the CAM.  
 Describe practices for direct charging specific capital projects for services provided by M&S 
functional areas.  
 Include as an appendix the affiliate agreement between M&S and the regulated utilities and 
the comparable agreement between M&S and the non‐regulated affiliates 
 Comprehensively describe policies and practices for apportioning costs among individual 
business units other than M&S.  For example, UW New Jersey provides fleet services and small 
meter testing services to other business units; these are not included in the CAM.  
 Fully describe the calculation and sources used to develop the allocation factors. 
 Define the “owner” of the CAM and processes whereby the CAM should be updated, including 
triggers for mid‐year updates (for example, the sale or acquisition of affiliates).   
5. The following table summarizes PA’s comparison of M&S’s CAM with components of CAM’s 
commonly found in the North American utility industry. 
CAM Component Description Included in the UWM&S CAM? Assessment of Effectiveness 
Purpose, including description of 
regulatory requirements  
The purpose is described in 
general terms and mention is 
made that the written 
agreements are on file with the 
various regulatory jurisdictions.  
Acceptable, except that no 
mention is made of any specific 
jurisdictional regulatory 
requirements.  
Terms / Acronyms No Not applicable 
Corporate Overview 
 Entity org structure 
 Brief description of 
corporate purposes 
Yes, but the organization 
structure discussion is not 
current and does not reflect 
services that are provided by 
corporate entities other than 
UWM&S 
CAM’s typically also include a 
legal organization chart.  
Cost allocation principles Typically, cost allocation 
principles described in a CAM 
include a hierarchy of preferred 
allocation practices beginning 
with the direct charging of 
services.  Also, the principles 
also typically include direction 
related to the transparency of 
the policy and consistent 
The Company’s draft cost 
allocation manual is not used to 
communicate Company policies 
related to cost allocations. The 
descriptions are not sufficiently 
detailed to provide guidance 
and are not fully aligned with 
the guidance provided in early 
2014 to each department. 
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application of the policy. 
Description of services provided 
among affiliates 
The only services described are 
those provided by UWM&S to 
the regulated and non‐
regulated operating segments. 
These descriptions are both 
incomplete and out‐of‐date 
and do not describe the 
functional alignment within 
departments of groups of 
employees providing services 
to specific operating segments. 
Detailed description of service 
company organization, services 
provided and charging mechanisms 
Yes, although the list of 
departments and their 
alignment with specific 
allocation codes and 
methodologies is not complete. 
These descriptions are both 
incomplete and out‐of‐date 
and do not describe the 
functional alignment within 
departments of groups of 
employees providing services 
to specific operating segments. 
Time reporting processes Yes, time reporting is briefly 
described. 
The description does not reflect 
the detail by department 
described in the early 2014 
time reporting guidance letters. 
Affiliate billing processes The M&S Billing section of the 
CAM describes at a very high 
level the process for billing 
affiliates for M&S costs.   
Additional details related to the 
billing process would be of 
value including responsibilities, 
controls, and processes 
available to address billing 
questions or disputes.  
The CAM does not include an 
example copy of a bill.   
Responsibility for maintaining CAM 
including triggers for mid‐period 
updates to the allocation factors 
No Not applicable 
Listing of Exhibits (e.g., Service 
Agreements, Service Level 
Agreements) 
Partial, the only exhibit is a now 
outdated list of the April 2011 
allocation factors  
Incomplete; exhibits typically 
include current calculations of 
the allocation factors as well as 
current example Agreements 
between affiliates (principally 
the shared services company) 
and the operating companies 
and service level agreements.  
The Company does not 
currently utilize service level 
agreements. 
6. Specific cost allocation factors are at the departmental level rather than at the “service” level.  
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a. For example, for Human Resource department, all costs are allocated based on the Number 
of Employees.  Defining an HR cost pool to capture costs of services related specifically to the 
bargaining unit workforce (e.g., labor contract negotiations and grievance handling) and 
allocating these costs based on the Number of Union Employees may be more appropriate, 
especially given the non‐union composition of the non‐regulated segment workforce.  
b. Certain non‐labor expenses such as ADP‐provided payroll services are also allocated based on 
Number of Employees through the Corporate Assumptions process.  In most organizations, 
the complexity of a union payroll is significantly greater than a non‐union payroll due to pay 
differentials, premiums, deductions, etc.  In addition, union employees are paid on a weekly 
basis rather than a bi‐weekly basis which is typical for the rest of the Company. 
c. While not explicitly related to the concept of “services” based allocation practices, Property 
Accounting costs are commonly allocated in total to construction activities through the A&G 
capitalization process.   This can be accomplished using the Company’s existing processes 
which allow individual employees to report time to different allocation codes – in this case, 
the construction overhead code.  Through the use of this code, Property Accounting services 
are effectively allocated to individual business units based on an appropriate underlying cost 
driver – level of construction spend.   
d. Strategic planning services are embedded in Business Development costs which are not 
allocated to the regulated and non‐regulated business segments.   
7. Some non‐labor costs associated with services provided by M&S employees are directly charged to 
business units rather than go through the M&S billing process. Examples include: 
a. Out of pocket expenses related to internal audits and regulatory services. 
b. Certain legal fees 
8. The use of “Capitalization” as the allocation factor for functions such as IT (excluding CC&B‐related 
costs and many non‐labor costs) and Finance and Accounting (charged to BU 305) resulted in 
approximately 98% of these costs being allocated to the regulated segment in 2014.  This result may 
not be fully reflective of the underlying cost drivers.  For these functions, the use of the general 
allocator may result in allocations more reflective of underlying cost drivers. 
9. The following costs are not allocated to the regulated and non‐regulated business units including 
UW‐NY: 
 Non‐regulated segment related memberships and sponsorships; 
 Suez management fee; 
 Certain consulting costs (included lobbying expenditures); 
 Certain external audit fees; 
 Certain legal expenses; 
 Corporate charitable contributions; and,  
 Certain business development costs (e.g., costs associated with the acquisition of the 
Long Island properties were retained at Corporate in 2014). 
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9. Company management has indicated that it has started a process to update its cost allocation 
practices and the related affiliate agreements. This update is being coordinated with the upgrade to 
the PeopleSoft ERP which is currently underway. 
8.4 Recommendations
1. The draft M&S CAM should be updated to address the items described in the above findings and 
made an official Company policy document.  
2. Revise the set of allocation factors currently used including the three factor methodology described 
in the previous chapter to better reflect underlying cost drivers, improve consistent, and improve 
efficiency.  This includes the expanded use of the three factor formula and the tailored use of a 
limited number of “service” based allocators. 
a. As an example, the allocation process for Human Resources and Payroll services could be 
tailored to better reflect the underlying differences in cost drivers discussed above 
between union and non‐union workforces. 
b. This could be accomplished by allocating payroll costs based on the number of 
paychecks issued per month.  For Human Resources, an additional cost pool could be 
established to accumulate costs uniquely driven by bargaining unit issues (grievances, 
contract negotiations, etc.); these costs would then be allocated to business units based 
on the number of represented employees. 
c. The change recommended here, while not a process simplification, is consistent with the 
general nature of our recommendations in that it is more reflective of the Company’s 
current business model while still being based on readily available allocation factor data. 
3. Develop policies and procedures to ensure that new hires and employee changes resulting from 
internal transfers and departmental reorganizations are trained on time reporting and cost allocation 
practices including the direct charging of time and expenses.
4. Continue the processes currently underway to update cost allocation practices and affiliate 
agreements consistent with the recommendations include in this report.  

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Scope of the Review A.1
The scope of review of the economic analysis of M&S services in the aggregate includes the following: 
 Identify the current services provided by M&S at the department level;  
 Evaluate the effectiveness and efficiency of the needed services; 
 Evaluate the benefit of such services to the customers of the UW‐NY utility; 
 Examine and benchmark the most recent cost of the services the UW‐NY utility receives 
from M&S; 
 Determine if the provisions of these services are the most cost effective alternative;  
 Perform a cost benefit analysis comparing M&S services to alternative outside sources of 
equivalent services; and, 
 Recommend, if needed, sufficient and proper controls so that charges for services under 
the agreement result in reasonable costs and are the best alternative for provision of the 
service such that the UW‐NY utility can independently compare the cost of obtaining the 
service through the M&S Company to that of non‐related parties or having the utility 
performing the service itself. 
Approach A.2
To assess the effectiveness and efficiency of the needed services, PA compared the total cost of each of 
the ten services described below to the normalized peer panel median value of these same services for 
the companies participating in PA’s Corporate and Shared Services benchmarking study.  
Comparing costs for these ten services in the aggregate to the benchmarking peer panel is critical to 
assessing the effectiveness and efficiency of these services.   An  analysis at this level avoids issues 
associated with differing capitalization and cost allocation practices which impact service costs at the 
individual operating company (e.g., UW‐NY) level.   
Additionally, for each service provided by M&S to the UW‐NY utility, PA performed the following:  
 Obtained copies of the monthly M&S invoices for services billed to UW‐NY in 2014; 
 Obtained financial reports detailing costs direct charged to UW‐NY related to the Shared 
Services;   
APPENDIX A – ECONOMIC ANALYSIS A
RESULTS FOR M&S SERVICES (TOTAL
COST)
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 Provided the Company with an initial data request (IDR), including a request for cost data for 
approximately 190 sub‐processes typically included in Shared Services provided to affiliate 
companies; 
 Reviewed responses to IDR and submitted follow‐up request to M&S; 
 Met with M&S and UW‐NY employees for each Shared Service; and, 
 Completed the benchmarking model and analysed results. 
Determination of Total M&S Costs for Benchmarking A.3
In order to meet the Commissions requirement to “…examine and benchmark the most recent cost of the 
services UW‐NY utilities receive from M&S”, it was necessary to determine the total costs of each of the 
Shared Services provided by M&S to the business units.   Typically, Company internal and external 
financial and managerial reports do not capture the true total cost for each Service.   Initially, we 
requested detailed financial and cost data for 2014 from UW.  Among the data we received is a report 
called the “M&S Cost & Fee Summary by Department” or the “700 Report”.  
The 700 Report details costs that are included in approximately one hundred “Departments” which are 
then sub‐totaled into fourteen cost pools as shown below: 
1. Corporate Administration, which includes: 
a. Executive Management Team; 
b. Internal Audit; and, 
c. Environmental Health & Safety. 
2. Finance, which includes: 
a. General Accounting; 
b. Utility Accounting; 
c. Payroll; 
d. Taxes; 
e. Financial Planning; 
f. Internal Control & Enterprise Risk Management; 
g. Treasury; and, 
h. Procurement. 
3. Legal 
4. Information Technology 
5. Customer Services 
6. Technical Services, which includes: 
a. Engineering; 
b. Quality; and, 
c. Technical Services. 
7. Human Resources 
8. Corporate Communications 
9. Suez Environment 
10. Regulatory Business 
11. Business Development 
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12. General & Administrative 
13. External Affairs 
14. Other Operations, which includes: 
a. Revenue Management. 
Each of the above is detailed into the following cost categories: 
 Personnel Costs; 
 Travel Expenses; 
 Outside Services; 
 Other Expenses; and, 
 Capitalized Time 
In the Table below, we have replicated the Total Cost line for the 2014 700 Report. 
2014 - M&S Cost & Fee Summary by Department

Personnel 
Costs 
Travel 
Expenses 
Outside 
Services 
Other 
Expenses 
Total Gross 
Expenses  
Capitalized 
Time 
M&S YTD 
Billed Fees 
Total $51,265,244  $2,194,861  $5,374,909 $7,000,366 $65,835,379 $12,798,366  $53,037,014 
We determined that the 700 Report, while useful for the purposes of determining the M&S fees billed to 
business units, did not identify the total cost for each Department in a way that could be used for 
Shared Service benchmarking purposes for several reasons. Among them: 
 Personnel Costs were not pure labor costs but included some benefits; 
 Embedded employees were not included; 
 Outside Services included an allocation from the IT department and did not include some costs 
which were separately charged to the business units – called “Corporate Assumptions”; and, 
 Capital costs were not included, which is an important element in total cost determination; 
As a result, we were required to develop the total cost for each Department using various other 
responses to data requests and other Company provided data.  These included: 
 Detailed cost reports for each Department prior to summarization in the 700 Report;28 
 For each Department, details of outside services utilized.  This impacts all Departments, but IT, 
Legal, and HR typically are the biggest users of outside services; 
 Other expenses were provided for each Department; 
 Labor costs were loaded at 31.2% for G&A cost and fringe benefits.29 
 Reports of Capital Expenditures for each Department. 
Having determined the total cost for each Department, for benchmarking purposes, we determined 
which Shared Services to include in our Review and which to exclude.  

28 Referred to internally as “the CUBE”
29 The Company provided PA with supporting documentation regarding the 31.2% loading factor.
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Services Included A.4
For the purposes of our Review, we have organized the Departments and underlying costs into Shared 
Services categories that are typical of Shared Services Companies and are aligned with the data included 
in our peer panel data.  These are: 
1. Financial Planning, including: 
a. Corporate Strategy 
b. Financial Planning 
c. Budgeting & Analysis 
d. Management Reporting 
e. Internal Control & Enterprise Risk Management 
2. Accounting, including: 
a. General Accounting 
b. Accounting Policy 
c. Taxes 
d. External Reporting    
3. Treasury, including: 
a. Cash Management 
b. Corporate Finance 
c.  Accounts Payable 
4. Internal Audit 
5. Procurement 
6. Legal 
7. Information Technology 
8. Human Resources, including: 
a. Payroll 
9. Corporate Communications, including: 
a. Media Relations 
b. Stakeholder Communications 
c. Employee Communications 
10. Regulatory Business 

The remainder of this Appendix will be organized around these ten Shared Services.  
Mapping Departments to Shared Services A.5
The next step was to map the costs for each UW Department to one of the ten Shared Services above.  
The table below shows where each Department’s costs were accounted for in this Report. 

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M&S Departments Mapped to Shared Services30

Department 
Number 
Department Mapped to Shared Service: 
500 General Accounting 
Accounting Services 520 Taxes 
525 Systems Accounting 
405 Corporate Communications 
Corporate Communications 
725 Creative Services 
440 Risk Management 
Financial Planning 
504 Expat Accounting 
505 Utility Accounting 
530 Financial Planning 
540 IC and Enterprise Risk Management 
570 Corporate Finance 
415 Human Resources 
Human Resources 
416 HR ‐ Shared Services 
417 Diversity 
515 UWM&S Payroll 
420 IT‐ Program Management 
Information Technology 
425 IT ‐ Service Delivery 
426 IT Service Development 
432 IT ‐ Infrastructure 

30 A number of the departments listed here were not active in 2014 as a result of a reorganization occurring at the start of 2014;
however, some costs were charged or credited to these departments in 2014 which is why they are included here. Examples
include Expat Accounting, Systems Accounting, Creative Services, Diversity, Contract & Admin Support, and Corporate Office
Support. In addition, the five IT departments were combined into a single department in 2014.
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433 IT Infrastructure Helpdesk 
535 Internal Audit Internal Audit 
610 Legal Legal 
445 Procurement 
Procurement 
580 Contract & Admin Support 
800 Regulatory Business Regulatory Business 
410 Corporate Office Support 
Treasury 501 Accounts Payable 
605 Treasury 
Total Cost of M&S Services A.6
The Table below shows the total costs of Shared Services to be $55.3M 
TOTAL COST OF SHARED SERVICES
Service 2014 Total M&S Cost
($000)
Financial Planning $5,086
Accounting 6,324
Treasury 1,926
Internal Audit 739
Procurement 2,422
Legal 5,393
Information Technology 19,828
Human Resources 7,455
Corporate Communications 3,507
Regulated Business 2,545
Total $55,319

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Looking at it another way, the following chart shows the relative size of each Shared Service. 

2014 Shared Services Costs
($M)

Costs Not Reviewed A.7
Office of the CEO: We have not attributed the CEO costs (Dept.400) to specific Services since the peer 
panel does not have them included.  
Office of the COO: Includes the costs associated with certain members of Executive Management (the 
COO and the SVP, Operations); this is Department 401. These costs are predominately related to utility 
operations and not included in our peer panel.  Also, the SVP includes External Affairs that is mostly 
embedded in the business units with only one employee centralized at M&S. 
Customer Care: includes operational functions that are mostly managed by the business units. In this 
case UW‐NY.  M&S does have a “Customer Care’ group (Dept. 455) of ten employees managed by the 
Vice President, Customer Service who reports to the President, Regulated Segment.  This group provides 
guidance, training, control and, management reporting for the Customer Service process.   A key 
objective of this group is to standardize customer service practices throughout the United Water 
regulated business units.   This will lead to the possible consolidation of operational activities in the 
future. PA does not have comparable data for this group in its peer panel therefore we have not included 
it in our benchmarking review.   
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Environmental Health and Safety (Dept. 210) are mostly performed by employees embedded in the 
utility business units with only two employees providing oversight at M&S. 
Engineering & Technical Services is comprised mainly of Engineering (Department 205) and Quality 
(Department 255). The PA peer panel does not collect data for Engineering. Quality is specific to water 
utilities and peer panel data would not be comparable.   
Business Development’s sole purpose is to develop and grow the non‐regulated segment, i.e. 
Environmental Services.   The costs associated with Business Development are charged to the non‐
regulated segment and are not in the M&S fees allocated to the regulated business units and were 
excluded from our Review.   Business Development also has responsibility United Water’s strategic 
planning process. 
Revenue Management is an embedded operations function managing non‐revenue water issues and 
automatic meter deployment. 
Facilities services (Dept. 410) are mostly performed by employees embedded in the utility business units 
and by subcontractors with only two employees providing oversight at M&S.  Many of this department’s 
time and expenses in 2014 were associated with planning for and facilitating the move to Paramus. 
Other Miscellaneous departments are ones that have insignificant charges that do not map well to a 
specific Shared Service. 
Cost of M&S Shared Services - Summary A.8
We have benchmarked the ten services we identified, including the cost of employees embedded in the 
business units.  
As shown in the table below, the aggregate cost for these Services is $55.3M or 15.0% lower than the 
peer panel median on a normalized basis.  
M&S
Shared Service
Peer Median Cost
($000)
M&S Cost
($000)
Difference
($000)
Financial Planning $2,934 $5,086 $2,151
Accounting Services 2,544 6,324 3,780
Treasury 3,007 1,926 (1,082)
Internal Audit 1,111 739 (372)
Information Technology 35,820 19,828 (15,992)
Human Resources 5,295 7,455 2,160
Legal 5,189 5,394 204
Procurement 2,942 2,517 (425)
Corporate Communications 3,849 3,507 (343)
Regulatory Business 2,403 2,545 141
Total $65,096 $55,319 $(9,777)
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Financial Planning Services A.9
A.9.1 Description of Financial Planning Services
Financial Planning Services include: 
 Assessing the business environment; identification of key issues; developing business unit 
strategies and objectives, and examination of alternatives; developing multi‐year 
earnings, margin, cash, O&M, and capital plan; modeling the financial impact of new 
capital investments and balance sheet restructuring; forecasting for regulatory filings; 
performing analytic support for external stakeholders, and governing corporate capital 
expenditures;  
 Develops business unit and department financial business plans for the next year 
including earnings, margin, cash, O&M and capital plans;  
 Performs analysis of results and prepares variance commentary for earnings, margin, 
O&M, and Capital within the Company and business unit;  
 Prepares and revises forecasts for earnings, margin, cash, O&M, and Capital within the 
business units; and,   
 Review's actual information and projects the remainder of the current year future years. 
This function performs “what‐if” analysis for various scenarios for business unit decision‐
making. 
Financial Planning Services are the responsibility of the Senior Director, Financial Control & Corporate 
Finance within the Senior Vice President & Chief Financial Officer’s organization.  There are a total of 
fifteen employees providing Financial Planning Services.  
In addition, there are twelve embedded employees of which three are in UW‐NY. These embedded 
employees provide support to the UW‐NY President for planning and budget related matters as well as 
support to the M&S Financial Planning organization.  Costs for these employees have been included in 
the M&S costs for benchmarking purposes. 
A.9.2 Results of Financial Planning Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Financial Planning 
Services with the median of our panel.  
M&S Cost
($000)
Peer Panel Normalized Median Cost
($000)
$5,086 $2,934
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The chart below shows the total Financial Planning Services costs compared to our panel. As can be 
seen, the total M&S costs for this service are well above the median. 

A.9.3 PA Comment On These Results
Analysis of the results of this benchmarking result is hampered by the fact that Financial Planning could 
not complete the sub‐process cost template that PA provided with our initial data request. This template 
beaks cost down into sixteen sub‐process cost pools for Financial Planning that would identify which sub‐
processes are driving the cost above the median. These templates take a significant amount of time and 
effort to complete.  Unfortunately, the schedule for the completion of the report and the required filing 
date with the PSC did not allow sufficient time to complete the process.  
However, we are able to make the following observations regarding Financial Planning that likely 
contribute to its higher costs. 
As shown on the following page Suez Environment North America (SENA) has a complex organization 
structure.  SENA operates in approximately twenty States as well as in Canada.  The other members of 
the peer panel will have various numbers of affiliates or business unit but SENA is well above the number 
of business units supported by the panel members. 
As we will discuss later in this Appendix, the much lower than peer panel median spend for Information 
Technology is an indication that the upgrading and modernization of UW’s financial and operating 
systems has not been a priority.  While UW is in the process of upgrading its financial systems to the 
latest version of the PeopleSoft ERP, with implementation later this year, there need to be a thorough 
examination of UW’s IT processes and systems resulting in a long term IT Strategic Plan. 
As noted above, there are twelve embedded employees included in Financial Planning costs. Three of 
them are in UW‐NY. As we noted earlier, one of the benefits of the shared services structure is the 
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increase in ''economies of scale'' whereby the cost of centralized services are allocated over a large (and 
growing) universe of service users. The matrix style of structure adopted by M&S for Financial Planning 
can defeat that benefit when large numbers of employees remain embedded in the operating company.  
The total number of employees providing Financial Planning service is therefore twenty‐seven (fifteen at 
M&S + twelve embedded). The normalized median of employees staffing for Financial Planning in our 
peer panel is nineteen. Thus, M&S Financial Planning has eight more employees than the peer panel 
median.  The complexity of SENA structure and the number of affiliates requiring services is a likely 
driver for these higher staffing levels and costs. 
Financial Planning is comprised of mostly more senior employees than the other services at M&S and in 
our experience, in the peer panel.  This results in higher employee related costs for Financial Planning. 
Finally, the cost allocation factor for allocating Financial Planning costs to affiliates is total Capitalization. 
Business units with fewer assets would likely receive a lower allocation of costs if a more appropriate 
factor were used. 
A.9.4 Market information for Financial Planning Services
Currently Outsourced Services 
There are no outsourced Financial Planning Services. 
Appropriateness for Third Party Provisioning 
Financial Planning is an integral part of M&S’s strategic and business planning.  Many of the functions 
performed have a direct impact on UW‐NY ratepayers by developing financial plans supporting capital 
expenditures that effect service and reliability.   
For this reason in our opinion, it would not be prudent to outsource Financial Planning Services from a 
third party. 
Available Market Information 
PA has not examined market information for Financial Planning Services. 

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Accounting and Tax Services A.10
A.10.1 Description of Accounting and Tax Services
Accounting and Tax Services includes the following: 
 Managing the monthly closing process including account reconciliations, accounting issue 
resolution, and process improvement; preparing standard monthly journal entries and analysis 
to support accounting;  
 Managing the accounting for fixed assets including: work order creation and set‐up, analysis and 
monitoring of capital projects; creating and managing fixed asset records including asset 
addition, retirements, transfers or adjustments and the preparation of any related journal 
entries and account reconciliations; reporting of plant asset information for financial, audits, 
regulatory reporting, rate cases or other internal needs; process associated with the 
development, analysis, and accounting for depreciation;   
 Managing accounting policies, GAAP research, and implementation of new accounting 
pronouncements; providing guidance on accounting issues; communicating any new accounting 
guidelines and procedures and their impact to appropriate organizations organization;  
 Determining technical accounting details for specific transactions; performs research, 
consultations with external audit and guidance provided to the Company; 
 Preparing and filing standard regulatory reports, and other mandated reports as well as with 
preparing the accounting information needed to complete the annual report;  
 Ensures accurate accounting in all accounts;   
 Performs tax services including audit of assessed property taxes, payment of property taxes, and 
the accounting for property taxes; 
 Develops long‐range tax planning to optimize tax positions for the Company; this also involves 
analysis of laws and regulations as they impact the company’s interest;  
 Files federal state and local tax returns and defends all related income tax audits as well as all 
applicable sales, use, and gross receipts tax returns; and,  
 Ensures proper accounting in all tax accounts. 
Accounting Services responsibility is with the Corporate Controller, within the Senior Vice President, & 
Chief Financial Officer’s organization.  There are thirty M&S employees that provide these services to 
UW‐NY and other M&S affiliates.  
The Corporate Tax related services above, are performed in the Director, Tax Compliance, which is part 
of the Senior Vice President, & Chief Financial Officer’s organization. There are seven employees 
providing these services. 
M&S provides all the Accounting and Tax Services required by UW affiliates and there are no embedded 
employees.   
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A.10.2 Results of Accounting Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Accounting Services with 
the median of our panel.  

Total Cost of Accounting and Tax Services
($000)
Peer Panel Normalized Median Cost
($000)
$6,324 $2,544
The chart below shows the normalized Accounting Services costs compared to our panel of utilities.  As 
can be seen, the total M&S cost for this service is well above the median  

A.10.3 PA Comment On These Results
Analysis of the results of this benchmarking result is hampered by the fact that Accounting & Tax 
Services could not complete the sub‐process cost template that PA provided with our initial data 
request. This template beaks cost down into fourteen sub‐process cost pools for Accounting & Tax 
Services that would identify which sub‐processes are driving the cost above the median. These templates 
take a significant amount of time and effort to complete and, unfortunately, the schedule for the 
completion of the report and the required filing date with the PSC did not allow sufficient time to 
complete the process.  
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However, we are able to make the following observations regarding Accounting & Tax Services that likely 
contribute to its higher costs. 
As shown in the legal entity organization chart above, SENA has a complex organization structure.  SENA 
operates in approximately twenty States as well as in Canada.  The other members of the peer panel will 
have various numbers of affiliates or business unit but SENA is well above the number of business units 
supported by the panel members. 
The total number of employees providing Accounting & Tax Services is thirty‐seven (thirty for Accounting 
and seven for Tax). The normalized median of employees staffing for Accounting & Tax Services in our 
peer panel is thirty‐four. Thus, UW Financial Planning has three fewer employees than the peer panel 
median.   
Accounting Services management have told us that their processes continue to be highly manual 
including the reconciliation of 44 bank accounts.   Management also indicates that they continue to 
rework/revise accounting issues from past years 
As we will discuss later in this Chapter, the much lower than peer panel median spend for Information 
Technology is an indication that the upgrading and modernization of UW’s financial and operating 
systems has not been a priority.  While UW is in the process of upgrading its financial systems to the 
latest version of the PeopleSoft ERP, with implementation later this year, there need to be a thorough 
examination of UW’s IT processes and systems resulting in a long term IT Strategic Plan. 
Finally, the cost allocation factor for allocating Accounting & Tax Services costs to affiliates is Total 
Capitalization. Business units with fewer assets would likely receive a lower allocation of costs if a more 
appropriate factor were used. 
A.10.4 Market information for Accounting Services
Appropriateness for Third Party Provisioning 
Accounting and Tax Services in the utility industry require specific knowledge of regulatory and tax 
accounting as well as the various technologies used in the industry.  In addition, detailed knowledge of 
departmental budgets and IT systems would make outsourcing unadvisable.   For  these reasons and 
those discussed previously, in our opinion, it would not be prudent to source Accounting Services from 
third parties. 
A.10.5 Market information for Accounting Services 
Appropriateness for Third Party Provisioning 
Accounting and Tax Services in the utility industry require specific knowledge of regulatory and tax 
accounting as well as the various technologies used in the industry.  In addition, detailed knowledge of 
departmental budgets and IT systems would make outsourcing unadvisable.   For  these reasons and 
those discussed previously, in our opinion, it would not be prudent to source Accounting Services from 
third parties. 
Currently Outsourced Services 
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Local expertise is engaged to investigate and challenge property and gross receipts tax assessments.  
Forensic audit firms have been utilized for independent review of accounting issues.   
Available Market Information 
PA did not review any market data for Accounting Services. 

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Treasury Services A.11
We have included the following cost pools in Treasury Services: 
1. Treasury Services (Cash Management; Corporate Finance) 
2. Accounts Payable 
A.11.1 Description of Treasury Services
Treasury Services include: 
 Short term borrowing and investing, including activities such as, commercial paper 
issuance and associated activity or issuance fees, rating agency activity or issuance fees, 
money, cash pooling, EFT originations, tax payments, intercompany loans administration 
of transactions and daily settlement, determining daily cash position, and costs for issuing 
and paying agents;  
 Daily cash account reconciliations, treasury workstation administration; bank or third‐
party fees, such as service charges, positive pay fees, and security related fees for both 
utility and non‐utility account; all bank credit facility costs (e.g. bank lines, credit lines, 
revolvers) including any upfront fees and on‐going fees;  
 Develops a long‐range financing and dividend strategy consistent with the targeted credit 
profile, setting balance sheet targets, developing and recommending hurdle rates for the 
company’s business lines; and, 
 Rating agency relations includes managing communications with the three agencies.  It  
also includes annual rating maintenance fees and commercial paper surveillance fees.  
There are three M&S employees who provide these and other Treasury Services.  They report to the 
Vice President, Treasurer. 
Accounts Payable 
The Accounts Payable Services performed for UW‐NY by M&S include: 
 Processing and payment of vendor invoices, including special payments, for goods and 
services purchased through a purchase order;  
 Special payments meant to capture payments to vendors and other service providers that 
are made on an expedited basis, or are processed without all of the normal elements of 
an invoice, a purchase order, and a notice of receipt; and,  
 Managing and monitoring the use of the M&S Procurement Card process 
There are six M&S employees providing Accounts Payable Services.  They report to the Vice President, 
Treasurer. 
A.11.2 Results of Treasury Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
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panel to the same size as UW. The table below shows the actual M&S costs for Treasury Services with 
the median of our panel. 
M&S Cost
($000)
Peer Panel Normalized Median Cost
($000)
$1,926 $3,007
The chart below shows the normalized Treasury Services costs compared to our panel of utilities. 
As can be seen, the total M&S cost for this service is below the panel median. 

A.11.3 PA Comment On These Results
M&S does not perform some sub‐processes such as Investor Relations, which contributes to its lower 
costs. There are a total of forty‐four banks that the Treasury Services organization interfaces with.  The 
median employee staffing for Treasury Services in our peer panel is fifteen. This compares to the ten for 
M&S. 
A.11.4 Market Information for Treasury Services
Currently Outsourced Services 
Treasury has outsourced Payroll Services to ADT.  The latest contract was effective January 13, 2013 for 
five years.  Payroll has been aligned with Human Resources for the purposes of this report. 
Appropriateness for Third Party Provisioning 
Treasury Services is an integral part of UW’s financial processes.  Many of the functions performed have 
a direct impact on UW‐NY ratepayers by developing financing plans that reduce revenue requirements 
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while obtaining capital required for expenditures that effect service and reliability.  This requires not 
only keen finance skills but also solid knowledge of the financing markets available to the utility industry.  
For these reasons and those discussed previously, in our opinion, it would not be prudent to outsource 
Treasury Services. 
Accounts Payable Services processed 132,800 invoices in 2014. These invoices totaled approximately 
$432.7M from 8,677 active suppliers. To process this volume in an efficient manner requires that 
Accounts Payable staff have a sound familiarity with the products and services provided, the M&S 
organizations that benefited from them, and to be tightly integrated with these organizations 
technologically.   For  these reasons and those discussed previously, in our opinion, it would not be 
prudent to outsource Accounts Payable Services to a third party. 
Also, as noted above, these services do not appear to be over‐staffed and are operating below the peer 
panel cost line.  We do not see a cost advantage to outsourcing these services. 
Available Market Information 
PA has not examined market information for Treasury Services. 

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Internal Audit Services A.12
We have included the following cost pools in Internal Audit Services: 
1. Internal Audit 
2. Corporate Ethics Compliance 
A.12.1 Description of Internal Audit Services
M&S Internal Audit Services is established as an independent area primarily responsible for the analysis, 
assessment and supervision of the relevant internal control and risk management systems for the 
Company.  Services include: 
 Performs independent, objective assurance and control advisory services.  This includes 
all audits as well as development of forward looking audit plans that are independent and 
reviewed with the Company's Audit Committee; and, 
 Manages and administers corporate ethics compliance programs.  This includes various 
codes of conduct requirements, whistleblower cases, ombudsmen services, and 
associated compliance reporting.   
Internal Audit Services are the responsibility of four M&S employees including the Director of Internal 
Audit who reports to the CEO.  
There are no embedded employees at UW‐NY or other affiliates.  All costs are at the M&S level and are 
directly charged or allocated to affiliates. 
A.12.2 Results of Internal Audit Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Internal Audit Services 
with the median of our panel. 
Total
Internal Audit Cost
($000)
Peer Panel
Internal Audit Normalized Median Cost
($000)
$739 $1,111
The chart below shows the normalized Internal Audit Services costs compared to our panel of utilities.  
As can be seen, the total M&S cost for this service is below the peer panel median. 

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A.12.3 PA Comment On These Results
None.
A.12.4 Market Information for Internal Audit Services
Currently Outsourced Services 
External Audit Services are currently sourced to Mazars.  The use of an independent external auditor is 
consistent with best practice. Internal Audit Services are not currently outsourced.   
Appropriateness for Third Party Provisioning 
In 2014, Internal Audit completed 25 audits consuming 6,460 hours.  22 audits are planned for 2015. 
Utility Internal Audit Services organizations are typically staffed with versatile, multi‐disciplinary, 
professionals with an in‐depth knowledge of the utility industry. Team members typically bring to bear 
their in‐house experience within the utility business units and they generally have prior experience in 
public accounting.  
While Internal Audit Services has the potential to be outsourced, in our experience at investor‐owned 
utilities, the service is not typically outsourced.  Only one of the utilities in a prior peer panel used an 
outsourced service provider for Internal Audit and we have observed that this approach has resulted in 
higher than average costs for that utility.    
On the other hand, Internal Audit Services will, on occasion, outsource specific one‐time audits that 
either required specific expertise not found in the organization or other workload requires temporary 
staff augmentation.  Internal Audit informs us that they had no such instances during 2014. 
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In our opinion, Internal Audit Services is not a service where UW‐NY could reasonably expect cost 
savings to be achieved through outsourcing. 
Available Market Information 
PA did not investigate market information for Internal Audit Services.   In our experience, pricing for 
these services reflect many factors, which combine to make pricing difficult to assess.  Given that the 
overall cost of Audit Services is equal to the peer panel median, we did not analyze the market further 
for these services. 

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Procurement Services A.13
A.13.1 Description of Procurement Services
Procurement Services includes procurement planning and scheduling; RFP, RFQ, RFI creation; and
management of the bidding process which consists of bidder selection, invitation, bid package
preparation and distribution, bid evaluations, vendor selection, and contract award, including master
agreements.
There are fourteen M&S employees who provide Procurement Services to the UW affiliates. They report
to the Vice President Treasury & Chief Procurement Officer.
There are no embedded employees in UW-NY providing Procurement Services.
Procurement Services issued 84 RFPs, RFIs, and RFQs for professional services in 2014.
A.13.2 Results of Procurement Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Procurement Services 
with the median of our panel. 

Total Cost of Services
($000)
Peer Panel
Normalized Median Cost
($000)
$2,517 $2,942
The chart below shows the Procurement Services costs compared to our normalized panel of utilities.  
As can be seen, the total M&S cost for this service are below the median of the peer group. 
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A.13.3 PA Comment On These Results
None.
A.13.4 Market Information for Procurement Services
Currently Outsourced Services 
There are no Procurement Services outsourced to third parties. 
Appropriateness for Third Party Provisioning 
Procurement Services requires specific and detailed knowledge of the water utility business, and 
contributes the most value to the business when it is tightly integrated with utility operations.  PA does 
not consider this service as a candidate for third party sourcing. 
Available Market Information 
PA did not review market information for this service.   
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Legal Services A.14
A.14.1 Description of Legal Services
Legal Services provides the following services: 
 Legal Services handles all matters related to general litigation involving the corporation;  
 Performs legal services for securities and corporate financial transactions, financial 
reporting and disclosures, business organizations, mergers, acquisitions and business 
development, corporate governance, internal controls and risk management, insurance, 
executive compensation;  
 Manages legal services for commercial and contract law matters for the corporation, 
including real estate matters and land use permits;  
 Serves as board secretary and support corporate governance functions, board of directors 
meetings, legal opinion letters, assists audit and compliance functions, performs and 
attests internal controls, and ensures compliance with corporate registration and 
regulation; 
 Retains and manages external counsel to provide legal representation in specialized areas 
of law and to manage variable level legal work; 
 Legal work supporting the negotiation of water purchase agreements and other 
procurement contracts as well as legal work related to franchise renewals, water rights; 
 Provides legal advice and representation with regard to intellectual property matters;  
 Performs legal services for matters involving environmental law for the corporation 
including environmental permitting activities, due diligence, defense in enforcement 
actions, compliance advice, representation in environmental clean‐up and environmental 
litigation costs; 
 Provides legal advice, representation and counselling in matters arising under federal and 
state water regulatory laws, regulations and policies as they relate to the Company’s 
utility related assets for water and waste water;  
 Provides risk management services including management of the insurance and surety 
bond programs; and,   
 Manages and administers corporate legal and regulatory compliance programs, other 
than Ethics Compliance.  
Legal Services are the responsibility of the Vice President, General Counsel.  There are twenty‐one M&S 
employees providing Legal Services at M&S, including two employees providing risk management 
services.  
A.14.2 Results of Legal Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
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panel to the same size as UW. The table below shows the actual M&S costs for Legal Services with the 
median of our panel. 
M&S Legal Services Cost
($000)
Peer Panel Normalized Median Cost
($000)
$5,394 $5,189

The chart below shows the Legal Services costs compared to our panel of utilities described in.  As can be 
seen, the total M&S cost for this service are slightly above the median cost in the peer panel. 

A.14.3 PA Comment On These Results
None.  
A.14.4 Market Information for Legal Services
Currently Outsourced Services 
Legal Services does outsource a significant amount of work totaling $3.1M, or 58.2% of total legal spend.   
Appropriateness for Third Party Provisioning 
There are certain Legal Services that can be prudently outsourced, at least in part, given that the 
governance remains at M&S.   As  discussed above, Legal Services at M&S utilizes third‐party legal 
services frequently. 
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Available Market Information 
The legal work routinely outsourced is usually of a complicated, specialized nature where the company 
is seeking to obtain specialized knowledge and expertise.   Senior ‐level legal resources are typically 
selected for these assignments based on the possession of these specialized, unique skills.  
PA did not review market information for legal services. 
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Information Technology A.15
A.15.1 Description of Information Technology Services
Information and Operations Technology Services include: 
 Operates and monitors data center infrastructure and applications, backup & restore 
services, change management administration, batch job management, hardware and 
software installation and decommissioning;   
 Technical support, problem resolution, and the application of minor enhancements, 
upgrades and patches to applications;  
 Develops, supports and manages methodologies and measurements for effective delivery 
of business solutions;   
 Designs, develops, tests and implements new information technology and new 
information technology standards and tools for computing environments.  
 Services provide support center user interface as well as Tier 1 and Tier 2 support for End 
User support requests; 
 Installs, maintains and resolves service problems for end user computing devices, 
software, LANs and peripherals;  
 Manages the installation, operation, and on‐going network security administration 
including: identity and access management, user provisioning, access control, monitoring 
and managing security systems including firewalls, IDS/IPS, and event management 
systems, vulnerability management (patching and antivirus administration), etc.;  
 Architecture, design, implementation, technical support, problem resolution, application 
of minor enhancements, upgrades and patches for operating and financial systems; 
 Implements the cyber security policies and controls development and architecture 
evaluation of security solutions and it monitors alignment with best practices, incident 
response planning, and; 
 Manage equipment, service and usage expenses paid to telecom providers for phone, 
data circuits, Internet, etc.  This includes WAN costs such as fiber backbone or microwave, 
whether those WAN costs are external service provider costs or are provided by internal 
resources. 
There are thirty‐nine M&S employees included in this analysis who report to the Senior Director, 
Information Technology. There are no embedded employees.   

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A.15.2 Results of Information Technology Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for IT Services with the 
median of our panel 
M&S IT Cost
($000)
Peer Panel - IT Normalized Median Cost
($000)
$19,827 $35,820
Note that total IT spend is below the peer panel median by 44.6% 
The chart below shows the normalized IT Services costs compared to our panel of utilities.  As can be 
seen, the total cost for this service is well below the median in the peer panel. 

A.15.3 PA Comment On These Results
Information Technology (IT) costs to UW‐NY is below the peer panel median spending by 44.6%.  In our 
view, this indicates that M&S has not made financial and operational system modernization a priority.  
As we discussed in the Financial Planning and Accounting Services Chapters above, the complexity of the 
SENA structure require significant manual effort to provide those services.   While  the upgrade to 
PeopleSoft scheduled for later this year will provide some relief, it is not clear that M&S has long term 
strategy to modernize all financial and operating systems. 
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IT Services play a critical role in implementing systems that support the growth of the utility and enable 
efficient management of the complex organizational structure that follows. It appears that UW is 
somewhat behind in developing IT systems and services to address system needs. We believe this has 
contributed to the higher than median cost for both Financial Planning and Accounting Services. 
The use of outside services is a common method for modernizing or upgrading IT system. M&S spend for 
IT outside services is less than half the average for our normalized peer panel. 
Another indication of the lack of focus on IT is that there are thirty‐nine employees in M&S IT. The peer 
panel median number of employees is ninety‐three.  This is a significant gap in resources vs. the peer 
panel benchmark. 
A.15.4 Market Information for Information Technology
Currently Outsourced Services 
Information Technology typically sources a significant number of services to third‐party suppliers.  Data 
provided to PA shows that Information Technology spent $1.980M for outside services in 2014. This is 
10.0% of the 2014 IT spend.   Members of our peer panel average 21.3% of total spend to outside 
services.  
Appropriateness for Third Party Provisioning 
Many it services are suitable for sourcing to third parties.   These  include: data center operations & 
production control; computing engineering; process and project management; development of solutions; 
help desk; desktop, laptop & LAN services; business engagement; network and infrastructure security 
administration; utility operational technology systems; telecom infrastructure; telephony services; and 
cyber security. 
The Company has not provided us with a detailed list of outsourced functions. 
Available Market Information 
PA did not review market information for Information Technology. 
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Human Resource Services A.16
Human Resource Services includes Payroll Services.   
A.16.1 Description of Human Resource Services
Human Resource Services  
 The recruitment, screening, and selection of internal and external candidates;  
 Establishing relocation programs and management of employee relocations, including all 
administration and execution costs of the relocation program; 
 Designs and administers compensation processes including job evaluations, annual salary 
planning, incentive programs, executive compensation, deferred compensation, long 
term incentive programs; 
 Design, management and implementation of health, prescription, life insurance, pension 
and retirement, reimbursement accounts, employee assistance programs, and other 
benefits for all employees; 
 Manages strategy, negotiations, and contract interpretation. This includes arbitration 
resolution, mutual gains bargaining, local management support on grievances, discipline, 
adherence to the contract and training; 
 Identification, development, and delivery of training programs to enhance the skills and 
capabilities of the workforce;  
 Provides support on Human Resources technology and processes, technology strategy 
and solutions, portfolio management, corporate and ad hoc reporting, data analysis, data 
integrity and oversight, and system testing; and, process and release management;  
 Succession planning, performance management, career development, mentoring, 
executive coaching, career planning & development, and employee/organizational 
assessments; 
 Management and administration of all short and long term disability programs and FMLA, 
whether done internally or by a third party; disability insurance premiums, if any, and the 
cost of claims for self‐insured programs and insured programs with a deductible; medical 
services required by the Company for disability cases, such as second opinions, 
consultations, etc.; disability case management and return to work programs; 
investigations of short term disability claims; legal services, whether internal or external, 
related to disability cases;  
 Provides safety training requirements and communication tools, needs assessments and 
training program development, and compliance reporting, including investigation 
leadership and support; and,  
 Labor Relations including contract negotiations and grievance management. 
There are twenty M&S employees providing Human Resource Services in the Vice President, Human 
Resources organization. 
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Payroll Services 
 Payroll Services have been outsourced to ADT. These Services include: the issuance of 
employee payroll checks as well as processing employee withholding information, tax 
withholding deposits, quarterly payroll tax returns, payroll calculations, annual W‐2s and 
1099Rs and government reporting; processes pay adjustments; special pays and 
garnishments; preparing payroll tax filings; printing, stuffing, and distributing pay checks 
and electronic deposit statements;  
 M&S provides call center support for employee calls concerning time and attendance 
issues, as well as pay & recognition related issues (i.e. paycheck, final paycheck, sick time, 
vacation time, floating holidays, etc.); and, 
 M&S also provides guidance to timekeeping system users to troubleshoot time entry 
issues, determine how business processes impact time entry rules, answer time entry 
questions, create reports on time entry data, training to employees on time entry and 
issue communications about time entry/work rules and deadlines. 
There are six employees providing these services at M&S.   Thes e employees report to the Vice 
President, Treasury. 
A.16.2 Results of Human Resource Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The  purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Human Resources 
Services with the median of our panel. 
M&S HR Cost
($000)
Peer Panel
HR Normalized Median Cost
($000)
$7,455 $5,295
The chart below shows the total Human Resource Services costs compared to our panel of utilities.  As 
can be seen, the total M&S costs for this service are above the median. 

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A.16.3 PA Comment On These Results
Human Resources total M&S costs are higher than the peer panel median by $2.2M or 29.0%.   We  
attribute this, in part, to their higher than peer median headcount.  The peer panel median headcount is 
thirty employees, while M&S HR has thirty‐eight (40% additional) employees. This is due, we believe, to 
the nature of the non‐regulated services provided by SENA, which are more labor intensive than 
traditional regulated and infrastructure‐driven utility services. HR costs are allocated based on number 
of employees. 
This opinion is supported when looking at the comparison of the cost to UW‐NY to the peer panel 
median.  As shown in the public version of this Report, HR costs to UW‐NY are 30.5% below the peer 
panel median. 
A.16.4 Market Information for Human Resource Services
Currently Outsourced Services 
We did not receive data from the Company regarding HR market information. 
Appropriateness for Third Party Provisioning 
As discussed earlier, certain services can be prudently outsourced, at least in part, given that the 
governance and strategic aspects of the service are maintained in‐house.  HR services that are typically 
considered for outsourcing include: relocation services;∙temporary staffing managed services program; 
HR services center;  Medicare coordinator; health and welfare annual enrollment support; retiree drug 
subsidy reconciliation support; wellness program administration; financial basics training program; HR 
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survey services; HR coaching; health and welfare plan management; and active and retiree annual 
enrollment. 
The Company has not provided a detailed list of outsourced services. However, we were informed during 
a meeting with HR that most of the above services, if provided, have been outsourced. 
Available Market Information 
PA did not review any market information for Human Resources Services. 

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Corporate Communication Services A.17
A.17.1 Description of Corporate Communication Services
 Media Relations: Research and develop media response, positioning, and strategy to respond to 
media inquiries or place stories in the media.  Develop press releases, arrange interviews, and 
maintain 24/7 media relations availability.   Act  as company spokesperson. Also includes 
communications resources with respect to corporate responsibility, etc.  
 Corporate Awareness Communications or Advertising: General corporate awareness and brand 
image purposes, including "issue advertising". Spend includes agency/vendor fees to create and 
execute advertising.  
 External Informational, Safety, and Educational Communications: Communications or advertising 
spend that provides information and educational messaging on topics such as: billing and 
payment options, such as e‐billing, budget billing, and direct debit; rate options; low‐income 
programs, consumer protection and privacy rights notices; general water efficiency information; 
public safety, including ""call before you dig"" programs; school education programs; special 
educational programs such as environmental programs. 
 Product/Service Promotion: Communications or advertising spend that promotes products or/or 
services from which the utility will benefit.  
 Internal and Intranet Communications: Internal Communications included Company 
communications between employees or departments across all levels, or divisions, of an 
organization.   Intranet  Communications includes posting of content to the internal intranet, 
managing intranet user experience, interfacing with IT for intranet administration, measurement 
and analysis of intranet traffic and other data  
 External Publication and Communications: Communication targeted for non‐employee 
audiences (public, media).  
 Annual Report: Design, production, printing and distribution of the Annual report, including 
postage. 
 Internet Website Content Development and Maintenance: Development and/or curation of 
content for all externally facing company websites.  
 Social Media Communications: Management and administration of established corporate social 
media accounts, such as Facebook, Twitter, Instagram, and others, and the delivery of content 
through those social media channels.  
A.17.2 Results of Corporate Communication Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Corporate 
Communications Services with the median of our panel. 

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M&S -Corporate Communications Cost
($000)
Peer Panel - Normalized Median Cost
($000)
$3,507 $3,849
The chart below shows the total Corporate Communications Services costs compared to our panel of 
utilities.  As can be seen, the total M&S costs for this service are below the median. 

A.17.3 PA Comment On These Results
None.
A.17.4 Third Party Sourcing
Corporate Communications outsources a significant portion of its work.  In 2014, $791k, or 22.5%, of its 
total cost of $3.5M was paid to third party providers for services such as: printing, web support; 
community relations; and employee surveys. 

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Regulatory Business Services A.18
A.18.1 Description of Regulatory Business Services
The Regulatory Business Services provided by M&S include: 
 Translation of financial data into a State and regulated revenue requirements, including the 
preparation of supporting work papers; 
 Internal and external costs for cost of capital and cost of equity testimony;31 calculations of 
formula rates and filings associated with these calculations; 
 Oversight and policy guidance on regulatory proceedings; 
 Management and maintenance of routine State economic regulatory relationships and contacts; 
 Management and maintenance of routine regulatory contacts, with stakeholders;  
 Monitors issues and advocates positions in federal regulatory proceedings as they pertain to the 
Company's businesses;  
 Rate design and tariff administration activities. This also includes tariff interpretation activities, 
marginal cost analyses, and the pricing and tariff‐related aspects of special contracts requiring 
regulatory approval;  
 Participation in technical conferences, monitoring regulatory activities, and discussing issues 
with PUC staff; and, 
 Prepare required State and Federal regulatory reporting for initiatives including service quality 
indicator quarterly reports. 
There are eleven providing M&S Regulatory Business Services including the Vice President, Regulatory 
Business. 
A.18.2 Results of Regulatory Business Services Benchmarking
In order to benchmark M&S costs on a comparable basis, we normalized each of the peer panel 
companies’ costs for the same service.  The purpose of the normalization is to bring all utilities in the 
panel to the same size as UW. The table below shows the actual M&S costs for Regulatory Business 
Services with the median of our panel. 
M&S Cost
($000)
Peer Panel Normalized Median Cost
($000)
$2,545 $2,403

The chart below shows the total Regulatory Business Services costs compared to our panel of utilities.  
As can be seen, the total M&S costs for this service are just above the median. 

31 Mostly outsourced
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A.18.3 PA Comment On These Results
The cost of Regulatory Business function at any utility is typically related to the regulatory activity in the 
jurisdictions it serves.  M&S Regulatory Business supports approximately a dozen regulated affiliates in 
several States.   The peer panel median staffing for this service is eleven, which is the number of 
employees providing Regulatory Business Service at M&S. 
These results indicate an efficiently run Regulatory Business Services. 
A.18.4 Market Information for Regulatory Business Services
Currently Outsourced Services 
The Regulatory Business at M&S regularly engages third parties for expert analysis and testimony during 
regulatory proceedings.  No other regulatory services are outsourced. 
Appropriateness for Third Party Provisioning 
Regulatory Management Services are an integral part of M&S’s financial and regulatory compliance 
processes.  Many of the functions performed have a direct impact on UW‐NY ratepayers by developing 
plans that support the revenue requirements to obtain capital required for expenditures that effect 
service and reliability.  This requires not only keen finance and regulatory skills but also solid knowledge 
of regulatory compliance requirements and how they have evolved over time.  For this reason, in our 
opinion, it would not be prudent to outsource Regulatory Management Services to a third party. 
Available Market Information 
PA did not investigate market information for this service. 
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Following is the M&S Allocations Processing Controls Flowchart referenced in Task 2: Internal Controls.

M&S ALLOCATIONS PROCESSING B
CONTROLS FLOWCHART
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United Water – Management & Services
Accounting ManagerSenior Accountant
Ac
c
o
u
n
t
i
n
g

P
r
o
c
e
s
s
Start
Information is received from
various sources like AP, HR,
Legal, FP&A/BU’s, etc. for
the transactions to be
posted.
Book entries based
on the information
received (amount,
period)
Review and approve
the entries
Post the entries
Legend
Key Document
Key Control
Frequencies
Annually
Semi-annually
Quarterly
Monthly
On occurrence / Depends on BU
Run Corp.
Assumption
Allocation
Update various
allocation methodology
factors in the beginning
of the year.
Calculate current month
predicted fringe and
G&A amount.
Is the current month
predicted amount
materially different from
prior month predicted
amount?Yes
No change to
predicted amount
required.
Book current month
predicted amounts.
Run Indirect M&S
billing
Have all the Fringe and
Vehicle related entries
been posted?
Ask IT to Run Actual
Fringe, Vehicle &
Overhead Allocation
Notification from IT
that the allocations
have been run
Run Dept 950
Allocation
Run MS_GAR4
(Close Out)
Run Fringe and G&A
under/over balance
reclass to parent
BUs
End
Have all the Corp.
Assumption entries
been posted?
Yes
No
Ask IT to run
predicted Fringe and
Directs
Notification from
IT that the
Predicted Fringe
has been run
Notification
from IT that the
Directs have
been run
Yes
Perform and review
Account Reconciliation, as
per the account
reconciliation policy
Perform and review
Financial Analytics as per
analytics policy
KC
KC
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SUEZ WATER PENNSYLVANIA INC.
Comprehensive Review of SUEZ Water
Management & Services Fees
July 29, 2020

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2

CONTENTS

1 EXECUTIVE SUMMARY 4
1.1 Introduction 4
1.2 Objectives, Approach and Findings 9
2 SERVICE COMPANY OVERVIEW 12
2.1 Corporate Shared Services Overview 12
2.2 SUEZ Water Organization Structure 13
2.3 Services Included in Our Report 16
2.4 Mapping Departments to Shared Services 16
2.5 Costs Not Reviewed in this Report 19
2.6 Determination of SWPA Shared Services Costs for Benchmarking 20
2.7 Allocation Methodology 21
3 BENCHMARKING OVERVIEW 22
3.1 Shared Services Benchmarking Methodology 22
3.2 Normalization 22
3.3 Benchmarking Results 23
3.4 Analysis of Benchmarking Results 24
4 BENCHMARKING STUDY RESULTS 26
4.1 Total Cost of SM&S Shared Services 26
4.2 Shared Services Cost to SWPA 26
4.3 Need and Benefit of these Services to Ratepayers 28
4.4 Third Party Market Information 29
4.5 Financial Planning Services 31
4.6 Accounting Services 33
4.7 Corporate Tax Services 36
4.8 Treasury Services 39
4.9 Procurement Services 42
4.10 Legal Services 45
4.11 Information Technology 50
4.12 Human Resource Services 55
4.13 Corporate Communication Services 59
4.14 Regulatory Business Services 62
APPENDIX A – ECONOMIC ANALYSIS RESULTS FOR SM&S SERVICES (TOTAL COST) 65
Scope of the Review 65
Approach 65
Services Included in Our Report 66
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3

Mapping Departments to Shared Services 66
Total Cost of SM&S Services 70
Costs Not Reviewed 71
Cost of SM&S Shared Services - Summary 72
Financial Planning Services 72
Accounting Services 75
Corporate Tax Services 78
Treasury Services 80
Procurement Services 82
Legal Services 84
Information Technology 88
Human Resource Services 92
Corporate Communication Services 96
Regulatory Business Services 99

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4

1.1 Introduction
Pursuant to Pennsylvania Public Utilities (PaPUC) Bureau of Audits (Bureau) Order dated February 2017 in
Docket No. D-2016-2528481:
“SWPA has not conducted any internal or external studies to compare market rates
with the rates charged to or by its affiliates for intercompany transactions.”
The Bureau concludes “SUEZ Water Pennsylvania’s (SWPAs') Commission-approved affiliated interest
agreements (AIAs) govern its intercompany transactions, all of which specify that all services will be
provided between the affiliated companies at cost. However, in order to ensure that rates for
intercompany transactions are appropriate, regulated utilities must periodically evaluate the market rates
of services it provides to or receives from affiliates. In order to insulate its ratepayers from cross-
subsidization, a regulated utility’s charge for services (provided to affiliates) should be equal to or higher
than market rates; conversely, charges from the regulated utility’s affiliates to the regulated utility should
be equal to or less than market rates. Therefore, in absence of the periodic assessment of market rates
for services, SWPA could be overpaying for services it receives or undercharging for services it provides to
affiliates.”
Upon reaching the above finding and conclusion, the Bureau recommended that the Company:
“Periodically conduct internal or external studies to compare SUEZ Water
Pennsylvania Inc.’s intercompany charges for services it provides to or receives from
its affiliates.”
To address the Bureau’s recommendation, SUEZ Water, Inc. (SUEZ Water or the Company) engaged PA
Consulting Group (PA) to perform the recommended study. This report presents the results of the cost
of shared services review completed by PA.
1.1.1 Company Overview
SUEZ Water, originally founded as Hackensack Water Company in 1869, is an American water service
company headquartered in Paramus, New Jersey. Currently, SUEZ Water owns and operates 18 water and
wastewater utilities, and operates 113 municipal water and waste water systems through public-private
partnerships and contract agreements. SUEZ Water has over 1,000 employees and generated $593 million
in revenue in 2019. The following table provides a summary of the municipal water and wastewater
systems through public-private partnerships and contract agreements.

1 EXECUTIVE SUMMARY
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5

Water and Wastewater Facilities
Water Wastewater Waste
Treatment Distribution Collection Treatment Waste
Operations & Maintenance 26 20 26 31 2
DBO – Operating Phase 1 - 2 2 1
Concession - 1 1 - -
• Operations & Maintenance: Operating the facilities on behalf of clients (i.e. Municipalities, Borough, etc.)
• DBO - operating phase like an O&M (3rd phase of the DBO)
• Concession represents 2 contracts in Environmental Services (ES) where SUEZ operates, maintains and carries out investments
in public utility.

SUEZ Water Management and Services, Inc. (SM&S or Shared Services Company) is a wholly owned
subsidiary of SUEZ Water, which is a wholly owned subsidiary of SUEZ North America, Inc. (SNA).
SM&S provides administrative, engineering, legal, operations, accounting, finance, human resources,
purchasing, insurance, data processing, customer service, billing, public relations, planning and
ratemaking services, collectively known as "Shared Services", to the operating subsidiaries of SUEZ Water.
SM&S also provides Shared Services to SUEZ Water Environmental Services, Inc. (SUEZ Environmental),
which provides non-regulated water distribution services to several municipalities throughout the United
States and limited services to SUEZ Treatment Solutions Inc. and Utility Service Group Inc.
SUEZ Water Pennsylvania (SWPA) is a regulated water utility and a subsidiary of SUEZ Water Resources,
which is a subsidiary of SUEZ North America Inc. (SNA). SWPA consists of 96 employees, 64,379 active
customers and annual revenues of $51.4 million as of fiscal year 2019. SWPA’s organization chart is below:

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6

A partial legal entity organization chart showing the relevant entities under SUEZ North America, Inc. is
below1.

1 SWNY is a wholly owned subsidiary of SWNJ.
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1.1.2 SUEZ Water Organization Structure
The following charts represent the executive organization structure of SUEZ Water Resources and the
regulated business segment:

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* Dotted line indicates a functional report to Utility President and direct to Corporate department head.
For example, the Director of Human Resources and Utility Operations has a direct report to the SVP of
Human Resources and a functional report to the President of Utility Operations.
SM&S provides services through the organizations represented by the light and dark blue shade boxes.
The light blue shaded boxes represent services supporting all business divisions across Suez NA (known
as L1 employees) and the dark blue represents services supporting a single business division (known as
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L2 employees), either supporting utility operations or non-regulated operations. Red shaded boxes are
services for a specific business unit (L3 employees) and orange shaded boxes represent contractors.
The remainder of this chapter presents a high-level summary of the objectives, approach and findings for
the work performed. More detailed discussions are provided in the individual chapters.
1.2 Objectives, Approach and Findings
1.2.1 Objectives
• Identify the current services provided by SM&S at the department level;
• Evaluate the effectiveness and efficiency of the needed services;
• Evaluate the benefit of such services to the customers of the SWPA utility;
• Examine and benchmark the most recent cost of the services the SWPA utility receives from
SM&S;
• Determine if the provisions of these services are the most cost effective alternative; and,
• Perform a cost benefit analysis comparing SM&S services to alternative outside sources of
equivalent services.
1.2.2 Approach
The focus of this comprehensive review is on the fees SWPA is charged by SM&S. However, to assess the
effectiveness and efficiency of the services provided to SWPA, PA believes the review needs to also include
an assessment of the service costs in the aggregate (or SM&S level). An analysis at this level avoids issues
associated with differing capitalization and cost allocation practices among peer panel companies which
impact service costs at the individual operating company (e.g., SWPA) level.
To assess the effectiveness and efficiency of the services provided by SM&S, PA compared the total cost
of each of the ten services (described below) to the normalized peer panel median value of these same
services for the companies participating in PA’s Corporate and Shared Services benchmarking study. Our
specific approach to completing this assessment, as well as the results of this assessment, is provided in
Appendix A to this report.
To assess costs charged to SWPA, we started by identifying costs on the books of SWPA for 2019 for each
of the ten services and then compared those costs to the normalized peer panel median value for these
same services.
To accomplish this cost comparison, and the other requirements of the economic analysis task described
above, PA performed the following for each service provided by SM&S to the SWPA utility:
• Obtained copies of the monthly SM&S invoices for services billed to SWPA in 2019;
• Obtained financial reports detailing costs direct charged to SWPA related to the Shared Services;
• Provided the Company with an initial data request (IDR), including a request for the department
which provides the services of approximately 250 sub-processes typically included in Shared
Services provided to affiliate companies;
• Reviewed responses to the IDR as well as responses to follow-up requests to SM&S;
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• Interviewed SM&S and SWPA employees, as needed; and,
• Completed the benchmarking model and analysed results.
1.2.3 Key Findings
In total, SM&S costs retained at Corporate and not allocated increased by over $10M from 2018 to 2019,
reflecting legal fees incurred to complete a transaction with PGGM (Dutch Pension Fund) acquiring 20% of
the Utility Division starting 3/01/2019 as well as an agreement with PGGM to exclude certain corporate
costs from the allocation to the regulated utilities. This change resulted in a lesser amount of SM&S costs
allocated to the regulated utilities including SWPA.
For purposes of this study, we focused our review on the ten services shown in the table below. These
ten services represent 82% of total SM&S costs. For these ten services provided by SM&S to SWPA, we
compared the costs charged to SWPA in 2019 by SM&S to the normalized utility peer panel median cost
for these same services. The total cost of the ten services provided to SWPA is 14.8% below the normalized
peer-panel median in aggregate.2

SM&S Service
Peer Panel
Normalized
Median
Total SM&S
Charges to
SWPA Difference
($000)
($000) ($000)
Accounting Services $140 $199 $59
Corporate Communications 223 200 (23)
Financial Planning 187 128 (59)
Human Resources 307 323 16
Information Technology3 4 1,760 1,214 (546)
Legal 279 263 (16)
Procurement 223 115 (108)
Regulatory Business 112 187 75
Taxes 23 88 65
Treasury 57 102 45
Total $3,311 $2,819 ($492)

2 For purposes of this study, references to services provided to SWPA include the cost of services provided by SM&S and allocated
(or direct charged) to SWPA, the cost of certain services provided by outside service providers directly to the utility, and the cost of
employees embedded in utility operations.
3 SM&S owns various IT assets, both hardware and software. Depreciation of these assets is allocated to affiliates based on the
Company’s Cost Allocation Manual. In 2019, the amount of depreciation allocated to SWPA was approximately $400k. For IT
assets placed in service at SM&S in 2019, SWPA’s share of these costs, which is not allocated to SWPA but does represent costs
included in the peer panel data, was approximately $300k.
4 This includes approximately $5k in IT hardware directly charged to SWPA for items such as PCs and telecommunications devices
in 2019.
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• The total cost of these services was $2.82M, which is 14.8% below the normalized peer panel
median cost for these same ten services.
• For several services, the economies of scale achieved by peer panel companies with less complex
organization structures than SUEZ Water result in peer panel median costs below those of SWPA
on a normalized basis. This is consistent with the results of a similar study we performed for
United Water New York (now SUEZ New York) in 2015.
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2.1 Corporate Shared Services Overview
As the utility industry has worked to realize the benefits of specialization, scale, and scope in the context
of industry specific issues, one successful approach for delivering these benefits has been the shared
services model.
In this model, the parent corporation or an affiliated Service Company provides a common suite of services
to all affiliated utility service providers. This enables significant specialization of resources, provides the
scale to enable investment in sophisticated information systems to support all processes, and typically
results in lower costs through economies of scale. And as the parent acquires additional utility service
providers, this model can result in additional efficiencies as fixed costs are distributed over an increasing
customer base.
Given the larger service volume delivered through such shared service models, selective sourcing to third
parties may also be enabled, as the volume of work in specific areas may become large enough to be
economically attractive for third party service providers. Thus, the shared service model has the potential
to be an enabler of further sophisticated third-party sourcing, as it provides the aggregation of volume
necessary to achieve attractive pricing. PC help desk services are an example of this, where support for a
hundred PC users is not especially attractive, while support for a thousand or more PC users is much more
attractive to a service provider.
The consolidation of electric, gas, water and telecommunications industries have led to the structural
changes that created holding companies, service companies and shared service organizations. All of this
helps to reduce costs, provide better service, and standardize practices and procedures.
There is little argument regarding the benefits of centralizing functions and providing them on a shared
basis. Regulatory scrutiny, therefore, has focused primarily on the overall level of cost, the assignment of
those costs to specific utility franchises and the extent to which a utility has explored opportunities to
further reduce these costs.
There are two basic structures that can be used for the provision of corporate shared services. The first
is the formation of a stand-alone “Service Company” where all services for the affiliates are performed.
All personnel would be employees of the Service Company (SM&S in this case) and costs are part of the
Service Company budget and either directly charged or allocated to the affiliates utilizing an appropriate
cost allocation methodology. SM&S uses this approach for Shared Services such as Information
Technology, Treasury, Legal, General Accounting, Procurement, Revenue Management, Accounts
Payable, Taxes, Insurance, and the Rate Department.
The second option is a “matrix” style of structure, where some services are provided to the affiliates by
employees centralized at the Service Company (SM&S in this case), while other services or portions of
those services are provided by employees of the business unit (SWPA in this case). In this model, the
utility personnel typically only perform services for their utility (or in the case of SUEZ Water, to a small
2 SERVICE COMPANY OVERVIEW
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number utilities in the same geographic region) and as such all of their costs are part of the utility’s
operating budget, eliminating the need for cost assignment through either direct charging or allocation.
We refer to these as “embedded employees.” SM&S uses this approach for Shared Services such as
Financial Planning, Human Resources, Corporate Communications, Customer Service Admin,
Environmental Health & Safety, Capital Management, and Technical Services.
For example, the Director of Finance for the Mid-Atlantic5 division (which includes SUEZ Water PA), who
reports to the Mid-Atlantic division General Manager & VP (and who is also the SWPA Utility President),
supports the Mid-Atlantic division (which includes: PA, Delaware and parts of NJ operations). While the
Finance Director reports to the Utility President, he provides services similar to those provided by SM&S
Financial Planning (i.e., budget, cost controls etc.).
2.2 SUEZ Water Organization Structure
The following charts represent the organization structure of SUEZ Water6 and the regulated business
segment:

5 There is no holding company named Mid-Atlantic. The name is a part of the way the business is organized. For example, the General
Manager & VP, John Hollenbach, is a direct employee of SWPA. However, his time gets allocated to the different entities which fall
under the Mid-Atlantic division.
6 SWNY is a wholly owned subsidiary of SWNJ.
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* Dotted line indicates a functional report to Utility President and direct to Corporate department head.
For example, the Director of Human Resources and Utility Operations has a direct report to the SVP of
Human Resources and a functional report to the President of Utility Operations.
SM&S provides services through the organizations represented by the light and dark blue shade boxes.
The light blue shaded boxes represent services supporting all business divisions across SUEZ NA (known
as L1 employees) and the dark blue represents services supporting a single business division (known as
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L2 employees), either supporting utility operations or non-regulated operations. Red shaded boxes are
services for a specific business unit (L3 employees) and orange shaded boxes represent contractors.
2.3 Services Included in Our Report
For the purposes of our Review, we selected Shared Services categories that are typical of Shared Services
Companies and are aligned with the SWPA processes. These are:
1. Financial Planning, including:
a. Financial Planning
b. Budgeting & Analysis
c. Management Reporting
d. Internal Control
2. Accounting, including:
a. General Accounting
b. Accounting Policy
c. External Reporting
d. Non-Income Taxes
e. Accounts Payable
3. Corporate Tax
4. Treasury, including:
a. Cash Management
b. Corporate Finance
5. Procurement
6. Legal, including Insurance & Enterprise Risk Management and Corporate Compliance
7. Information Technology
8. Human Resources, including Payroll
9. Corporate Communications, including:
a. Media Relations
b. Stakeholder Communications
c. Employee Communications
10. Regulatory Business
This Report is organized around these ten Shared Services.
2.4 Mapping Departments to Shared Services
The first step was to map each peer panel sub-process to one of the ten SM&S Shared Services above.
This started with a rigorous data request of information from the Company that matches the sub-process
received from the other utilities in our peer panel to SM&S department numbers provided by the
Company.
The Company filled out PA’s template which includes approximately 250 sub-processes related to a vast
array of shared services provided to utility affiliates. Below is an example of this template which was sent
to the Company as a data request.
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Portion of Benchmarking Template for Communications and Advertising
Process Definition Account Sub process Department #
Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA06b
Administration of
Charitable
contributions,
corporate
sponsorships, and
charitable foundations

Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA09 Annual Report
Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA06
Charitable
Contributions -
Calculated

Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09 Claims
Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09b Claims against the
Company
Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09a Claims by the
Company

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In 2019, SM&S included 26 departments. The following table identifies the costs of services provided by
each of the 26 departments in 2019.
SM&S Departments
SM&S Department 2019 Costs ($000)
Accounts Payable $456
Administration_General $2,426
BTS – Define $3,388
BTS – Deliver $2,706
BTS – Operate $21,522
Capital Management $1,778
Corporate Communications $2,461
Corporate Office Support $1,003
Customer Service Admin $1,754
Environmental Health & Safety $1,501
External Affairs $2,082
Financial Planning $3,994
General Accounting $5,202
HR - Shared Services $368
HR CA SS Shared Services $505
Human Resources $3,621
Insurance $4,044
IT Depreciation $5,277
Legal $3,432
Office of the President - Divisions $1,537
Payroll $918
Procurement $1,560
Rate Department $2,221
Taxes $2,486
Technical Services $2,750
Treasury $1,919
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From these 26 departments shown in the above table, 18 align with PA peer panel sub-processes. The
table below shows where each of the 18 Department’s costs were accounted for in this report.
SM&S Departments Mapped to The Ten Processes in Our Report

Department
Number SM&S Department Mapped to Shared Service:
500 General Accounting
Accounting Services
501 Accounts Payable
520 Corporate Tax Corporate Tax
405 Corporate Communications Corporate Communications
530 Financial Planning Financial Planning
415 Human Resources
Human Resources 416 / 418 HR - Shared Services
515 Payroll
424 BTS - Define
Information Technology 425 BTS - Operate
426 BTS - Deliver
610 Legal
Legal
611 Insurance
443 / 445 Procurement Procurement
800 Rate Department Regulatory Business
605 Treasury Treasury

2.5 Costs Not Reviewed in this Report
Certain SM&S Department costs are not reflected in the cost of the ten shared services benchmarked.
These include the following departments:
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• Administration-General
• Capital Management
• Corporate Office Support
• Customer Service Admin
• Environmental Health & Safety
• External Affairs
• Office of the President - Divisions
• Technical Services
These departments represent approximately 18 percent of total SM&S departmental costs. This is
consistent with other corporate and shared services benchmarking studies we have performed, in which
approximately 70 percent of total service company costs are typically benchmarked.
The reasons for excluding these functions from the current study include a lack of comparable peer panel
data and costs are not allocated to the regulated segment including SWPA.
In the following Chapter, we present the results of our Benchmarking Analysis for SWPA.
2.6 Determination of SWPA Shared Services Costs for
Benchmarking
In order to meet the Commission’s recommendation to “…conduct internal or external studies to compare
SUEZ Water Pennsylvania Inc.’s intercompany charges for services it provides to or receives from its
affiliates”, it was necessary to determine the costs of each of the Shared Services provided by SM&S to
SWPA.
This was accomplished by performing the following.
SM&S Billing
We obtained copies of the monthly invoices for services billed by SM&S to SWPA in 2019. The costs
included in the invoices was compiled and mapped to the ten service categories identified above as
appropriate. Costs representing SM&S departmental costs which had been capitalized (the “A&G
Capitalized” amounts) were included to ensure comparability with peer panel data. 7
Treatment of Embedded and Direct Costs
We identified the cost of both employees embedded in SWPA as well as costs direct charged to SWPA
that relate to the twelve services benchmarked (for example, certain legal expenses of SM&S departments
incurred while providing services exclusively to SWPA). In both cases, costs were included to ensure
comparability with peer panel data.
Treatment of Capital Costs
For benchmarking purposes, PA includes capital costs at the regular run rate. Special projects, large one-
time investments, and large-scale upgrades are excluded to the extent they result in costs substantially
above the process' normal rate of spend. Regular run rate capital costs include labor and non-labor

7 Description of PA benchmarking methodology and use of a peer panel is discussed in Chapter 3 below.
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expenses. A portion of these capital costs representing SWPA overall share of SM&S costs were included
in SWPA costs to ensure consistency with the benchmarking panel.
2.7 Allocation Methodology
SM&S uses a three-factor methodology comprised of an equal weighting of:
• Gross Revenue;
• Total Assets, excluding investments in subsidiaries and goodwill; and,
• Payroll.
Costs are allocated based on the three-factor formula described above. In some instances, where
services benefit all business segments, costs are allocated across all business segments; in other
instances, the three-factor methodology is used to allocate departmental expenses among only the
regulated affiliates or among only the non-regulated affiliates. The departmental costs allocated are the
costs remaining after costs have been direct charged, capitalized, or charged to other balance sheet
accounts.

The following principles guide the allocation of costs for products or services provided by SM&S to its
regulated and non-regulated affiliates listed in SM&S’s Cost Allocation Manual (CAM):
• To the extent practicable, in consideration of administrative costs, costs should be collected and
classified on a direct basis for each asset, service or product provided;
• The general method for charging indirect costs should be on a fully allocated, cost-causative
allocation basis;
• All direct and allocated costs between regulated and non-regulated services and products should be
traceable on the books of the applicable regulated utility to the applicable Uniform System of
Accounts to the extent possible;
• Documentation should be made available to the appropriate regulatory authority upon request
regarding transactions between the regulated utility and its affiliates;
• Costs should be classified to services or products which, by their very nature, are either regulated,
non-regulated, or common to both; and,
• The primary cost driver of common costs, or a relevant proxy in the absence of a primary cost driver,
should be identified and used to allocate the cost between regulated and non-regulated services or
products and between regulated entities.

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3.1 Shared Services Benchmarking Methodology
To help analyze the costs for SM&S’s Corporate and Shared Services8 charged to SWPA, we compared the
actual costs charged to SWPA in 2019 to those in our panel of North American utilities.
This panel includes, in addition to SWPA, 10 utilities9 representing a range of size and operating
environments, for a total of 11 panel members. For 10 of the panel utilities, the most recent available cost
data is for calendar year 2016. To compare this data with SWPA’s 2019 cost data, we inflated the 2016
costs by 6.52%.10 Not all panel members provided cost data for each service benchmarked.

3.2 Normalization
The total, or absolute, cost of Shared Services for any company is clearly directly related to the size of the
company. However, the relative cost of Shared Services tends to decrease as a company’s size increases,
consistent with the economies of scale discussed above. Since no two companies are exactly the same
size, to compare costs across a group of companies, the absolute level of cost needs to be normalized to
adjust for size.
To normalize for size across our data set of 10 utilities and SWPA, we have used three equally weighted
measures of size – gross margin, net assets, and employee headcount. These factors comprise the
“Massachusetts Formula”, a widely accepted and time-tested approach for allocating many Corporate
Shared Services costs among jurisdictions and utility affiliates.
This approach allows us to directly compare costs for our panel of utilities, regardless of the size of the
utility. Using the Massachusetts Formula, as described below, we normalized each of these companies to
the actual size of SWPA.
This normalization is a three-step process:
Step 1: Calculate the Average Massachusetts Formula for the peer group:
a. Separately total the gross margin, net assets, and headcount for SWPA and all other 14 utilities
in the panel;
b. Calculate the percent of the total for each utility (1) gross margin, (2) net assets and (3)
headcount; and,

8 SM&S costs, including corporate assumptions, and costs related to these services that are embedded in the utility affiliates.
9 PA has confidentiality obligations with each utility. They will be labelled “A”, “B”, “C”, etc.
10 Bureau of Labor Statistics: CPI Detailed Report Data for December 2019
3 BENCHMARKING OVERVIEW
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c. Determine the average 1+2+3 above for each company.
d. This result equates to SWPA’s and each individual utility’s own general allocator.
Step 2: Calculate the Normalization Factor
a. For each utility in the panel, divide SWPA’s general allocator by each respective utility’s general
allocator from Step 1(d) above.
b. This result is the normalization factor for each utility.
Step 3: Normalize the Services Cost for each Utility in the Panel
a. Multiply the normalization factor, determined in Step 2 above, by the inflated actual 2016
costs11 for each shared service for each utility in the peer panel.
b. Costs for shared services for each member of the peer panel are now normalized in size to that
of SWPA.
3.3 Benchmarking Results
Once each utility in the peer group is normalized to the size of SWPA, we use the median cost of the peer
group for each Service to compare to actual 2019 SWPA.
We report our findings for each Service in Chapter 4, the Economic Analysis section of this report, using
the following charts and tables.
For Services where the SWPA actuals costs are at or below the median of the normalized peer panel, we
will show those results in GREEN similar to the chart below.

11 Inflated by 6.52% as discussed above.
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The red line represents the median of the normalized peer panel
For Services where the SWPA actuals costs are above the median of the normalized peer panel, we will
show those results in RED similar to the chart below.

As shown above, once normalized, the display will show where the SM&S costs charged to SWPA fit in the
overall cost structure of the peer group. Differences can be the result of several different factors including:
the overall higher or lower cost structure of the peer; the presence of economies of scale, and the
demographics of the respective service territories.
These benchmark comparisons provide an understanding of the efficiency with which SM&S provides each
Shared Service to SWPA, in comparison to our nationwide panel of utilities.
This information will also be displayed numerically in a table as shown in the example below:
(Name of Service)
($000)
Peer Group Median 963
2019 SWPA Actual Costs 827
SWPA Costs vs. Peer Median 136

3.4 Analysis of Benchmarking Results
Our methodology to analyze SM&S costs against the benchmark starts with identifying one-time costs or
costs that have spiked for some reason. For example, we might see certain Regulatory Business Services
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or Legal Services increase inordinately as a result of a particular regulatory proceeding. Once we have
identified the outlier, PA used its experience in these matters with benchmarking as well as meeting and
interviews with management to attempt to identify cost causation factors.
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4.1 Total Cost of SM&S Shared Services
The focus of this comprehensive review is on the fees SWPA is charged by SM&S. However, to assess the
effectiveness and efficiency of the services provided to SWPA, PA believes the review needs to also include
an assessment of the service costs in the aggregate (or SM&S level). An analysis at this level avoids issues
associated with differing capitalization and cost allocation practices which impact service costs at the
individual operating company (e.g., SWPA) level.
To assess the effectiveness and efficiency of the services provided by SM&S, PA compared the total cost
of each of the ten services (described below) to the normalized peer panel median value of these same
services for the companies participating in PA’s Corporate and Shared Services benchmarking study. Our
specific approach to completing this assessment, as well as the results of this assessment, is provided in
Appendix A to this report.
The remainder of this chapter is devoted to the Economic Analysis of the cost of SM&S Shared Services to
SWPA.
4.2 Shared Services Cost to SWPA
Our approach to assessing costs charged to SWPA was similar to that used to assess costs in the aggregate.
For each of the ten services, we identified the comparable costs on the books of SWPA for 2019 and
compared those costs to the normalized peer panel median value for these same services.
The benchmarked cost of the ten services included the cost of employees embedded in the business units
in SWPA and other applicable SWPA direct costs. Shown below are the total 2019 costs charged to SWPA.
Note that the total cost to SWPA is $2.8M, which is 14.8% below the peer panel median.
SM&S Service provided to SWPA
Peer Panel
Normalized
Median
Total SM&S
Charges to
SWPA Difference
($000)
($000) ($000)
Accounting Services $140 $199 $59
Corporate Communications 223 200 (23)
Financial Planning 187 128 (59)
Human Resources 307 323 16
Information Technology12 13 1,760 1,214 (546)

12 SM&S owns various IT assets, both hardware and software. Depreciation of these assets is allocated to affiliates based on the
Company’s Cost Allocation Manual. In 2019, the amount of depreciation allocated to SWPA was approximately $400k. For IT
assets placed in service at SM&S in 2019, SWPA’s share of these costs, which is not allocated to SWPA but does represent costs
included in the peer panel data, was approximately $300k.
13 This includes approximately $5k in IT hardware directly charged to SWPA for items such as PCs and telecommunications devices.
4 BENCHMARKING STUDY RESULTS
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SM&S Service provided to SWPA
Peer Panel
Normalized
Median
Total SM&S
Charges to
SWPA Difference
($000)
($000) ($000)
Legal 279 263 (16)
Procurement 223 115 (108)
Regulatory Business 112 187 75
Taxes 23 88 65
Treasury 57 102 45
Total $3,311 $2,819 ($492)

Corporate Shared Services Fees for SUEZ NA, that is, SM&S costs retained at Corporate at not charged to
the regulated utilities, increased from $2.1M in 2018 to $12.8M in 2019 as a result of PGGM (Dutch Pension
Fund) acquiring 20% of the Utility business starting January 1, 2019. While not directly impacting the
services benchmarked, this did have the impact of reducing SM&S fees allocated to SWPA in 2019 as shown
in the table below.
As a result of the restructuring, SUEZ went through a detailed review of SM&S employees’ job functions
and separated out the employees into different categories:
• L1-Corp
• L2-Utility
• L2-Environmental Services
• L2 Advanced Solutions
Utility received 100% of L2 Utility SM&S fees and a portion of L1 Corp SM&S fees based on the three-factor
allocation methodology. As a result of this restructuring, the SM&S charges to Utility reduced, while the
SM&S charges stayed at Corp increased. SUEZ did not find the need to hire additional employees or lay off
employees as a result of this restructuring.
The following table provides a 5-year historical trend of SM&S costs allocated to SWPA.
2015 2016 2017 2018 2019
Total SM&S Fees $2,965,150 $4,031,403 $4,509,809 $4,543,922 $3,787,059
YoY Increase - $1,066,253* $478,406 $34,113 ($756,863)
*The increase in costs from 2015 to 2016 is due to the change in allocation methodology. In 2015, many
of the non-labor charges went directly to the Business Units. These costs originated at “Corporate”, not
the utilities, but were not budgeted by any SM&S departments and therefore were not part of the SM&S
bill. Post PA’s 2015 study, the Company made the decision to include these costs as part of the SM&S
department managing the spend. The addition of ownership of certain large Information Technology
assets by SM&S, and the resulting charging of the depreciation of these assets also contributed to the
increase in SM&S fees from 2015 to 2016.
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With the new SM&S structure, SM&S functions may now have two separate departments instead of one,
where one department is focused exclusively on the utility business and the other department focused
exclusively on the Environmental Services (i.e., Non-Regulated) business.
In speaking with SWPA management, they expressed the benefits of the new structure which now clearly
defines the roles and responsibilities of the SM&S employees allowing management to reach out and feel
confident the services they received from SM&S are of high quality as the individual is 100% focused on
the side of the business in question.
With this new structure, the SM&S executives remain supporting both sides of the business, as they
usually oversee the department’s handling both the Utility and Non-Regulated businesses. For example,
the Legal department has a subsection that is Utility only and Non-Regulated only, but the chief counsel
is responsible for everyone and her time, along with her admin, is allocated to both sides of the business.
Some employees are assigned to specific states as their primary function, but on a department basis
management believes it is not economical to move SM&S employees to the business units due to the
benefits of shared services.
4.3 Need and Benefit of these Services to Ratepayers
Based on our experience in the utility industry, and confirmed through discussions with SWPA
management, all the Services benchmarked are required Services that benefit SWPA customers. And we
note that typical corporate services such as investor relations, shareholder services, and internal audit,
which we believe are also necessary corporate expenditures and are commonly allocated to affiliates, are
provided by SUEZ Corporate and not allocated to the US regulated utilities.
As noted previously, a Service Company is set up to provide a common suite of services to several utility
service provider affiliates. This enables significant specialization and provides the scale to enable
investment in sophisticated information systems to support all processes. Often, corporate acquisitions
of additional utility service providers result in an increasing ability to share the costs of these specialized
services over a greater base. This is referred to as “economies of scale”. Economies of scale benefit
ratepayers by the “sharing” of services and costs among affiliates those reducing the costs to individual
affiliates, including SWPA.
In discussions with SWPA General Manager & VP, John Hollenbach, it was clear the services provided by
SM&S are critical all year round to provide standardization and synergies across the business units. The
importance of SM&S services provided, which were highlighted in wake of the Coronavirus pandemic,
where vital to the ongoing operations of the business.
During the outbreak, a third of the SM&S employees were working remotely. We have learned through
discussions with management, the only way SUEZ was able to maintain ongoing operations was with the
help and support of the information technology services provided by SM&S.
Throughout the year, SM&S continues to provide the business units, including SWPA, with needed
services. For example, Procurement and Supply Chain Management ensures the business units receive
good pricing, EHS continues to develop a safe culture throughout SUEZ, and Human Resource Services
ensures policies that apply to corporate are the same across the utility business (i.e., compensation, merit
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increases etc.). Human Resource Services also provides; recruiting, hiring and retirement services to the
business units.
4.4 Third Party Market Information
In theory, all corporate services could be sourced from third party providers. However, this breaks down
in practice, as, for example, virtually every major corporation of which we are aware has prudently chosen
to retain leadership, governance, and certain technical skills and services in house. This is to ensure their
responsibilities to shareholders, regulators, and customers are being met with effective and consistent
company policies and standards, while confidential and proprietary information is properly safeguarded.
In discussions with management, we learnt outsourcing is not something heavily relied on as it is often
difficult to break out specific tasks. Outsourcing entire departments, for example supply chain, isn’t
economical due to the loss in efficiencies as a result of standardization across all business units. To keep
best practices across all the business units, management prefers most work to be done in-house.
In addition, we consider whether there is a significant relationship between the Service and an impact on
SWPA customers that might affect service and reliability.
Many Services require specific knowledge of utility regulation as well as the various technology and
Information Technology systems that would make outsourcing unadvisable. Others are an integral part of
SUEZ Water’s strategic and business planning process. In some instances, we considered the economic
and practical realities of outsourcing a small volume of services and the costs to manage a small contract.
With this logic in mind, we have identified certain SM&S provided services that we would not recommend
for outsourcing to third parties. These include:
− Accounting Services;
− Financial Planning Services;
− Procurement Services;
− Accounts Payable Services;
− Treasury Services; and,
− Regulatory Business Services.
We noticed some of the services listed above include cost for staff augmentation which we believe is
reasonable and consistent with industry practices.
However, there are certain services that can be prudently outsourced, at least in part, given that the
governance and strategic aspects of the service are maintained in-house. Examples include:
− Human Resource Services (e.g., Payroll);
− Information Technology Services (e.g., network services); and,
− Legal Services (e.g., Litigation).
For certain services, the combination of the attributes of the service and the resources available in the
marketplace make the use of a staff augmentation sourcing model more cost effective (i.e., where a level
of internal staffing is maintained, but is augmented by outsourcing certain activities or workloads), while
for other services a comprehensive outsourcing could be the most cost effective market solution.
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The Company provided market information to analyze outsources costs for certain outsourced activities.
Where we received sufficient data, we will comment on it. Otherwise, PA’s conclusions regarding the
availability of market service choices will be based on our experience in the industry.
Following is our function-by-function economic analysis for the ten services identified above.

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4.5 Financial Planning Services
4.5.1 Description of Financial Planning Services
Financial Planning Services include:
• Assessing the business environment; identification of key issues; developing business unit strategies
and objectives, and examination of alternatives; developing multi-year earnings, margin, cash, O&M,
and capital plan; modelling the financial impact of new capital investments and balance sheet
restructuring; forecasting for regulatory filings; performing analytic support for external
stakeholders, and governing corporate capital expenditures;
• Develop business unit and department financial business plans for the next year including earnings,
margin, cash, O&M and capital plans;
• Perform analysis of results and prepares variance commentary for earnings, margin, O&M, and
Capital within the Company and business unit;
• Prepare and revise forecasts for earnings, margin, cash, O&M, and Capital within the business units;
and,
• Review actual information and projects the remainder of the current year future years; perform
“what-if” analysis for various scenarios for business unit decision-making.
Financial Planning Services are the responsibility of the Finance Director, Finance Staff, Financial Control
& Corporate Finance within the Senior Vice President & Chief Financial Officer organization. There are
twenty-one employees providing Financial Planning Services at SM&S, of which six provide services to
the regulated business, nine provide services to the non-regulated business units, and six provide
services to all business units.

There is currently one embedded employee at SWPA providing Financial Services to the SWPA President
for planning and budget related matters as well as support to the SM&S Financial Planning organization.
Costs for this employee, has been included in the SM&S costs for benchmarking purposes.

4.5.2 Results of Financial Planning Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Financial Planning Services
with the median of our panel.
As noted above, the cost for Financial Planning Services to SWPA in 2019 was $128K.
The chart below compares this actual total cost with the peer median costs and shows that the total cost
to SWPA as well below the peer panel median.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 86 $ 42 $ 128 $ 187
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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $128K, or
32%, below the median.
Financial Planning Services ($000)
Peer Group Median $ 187
2019 SWPA Actual Costs $ 128
SWPA Costs vs. Peer Median ($ 59)
4.5.3 PA Comment on These Results
No comments.
4.5.4 Market information for Financial Planning Services
Currently Outsourced Services
No SM&S Financial Planning Services are outsourced.
Appropriateness for Third Party Provisioning
The services provided by Financial Planning routinely deal with confidential and sensitive issues, require
specialized skills and require Company and industry-specific knowledge. They are not routine and
transactional in nature, which often are typify services likely to be outsourced.
For these reasons, in our opinion, it would not be prudent to outsource Financial Planning Services from a
third party.
Available Market Information
Not applicable
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4.6 Accounting Services
We have included the following departments in Accounting Services:
1. Accounting (General Accounting, Accounting Policy, External Reporting, Cost Accounting,
Regulatory Accounting, Fixed Assets, and Taxes Other than Income Taxes.)
2. Accounts Payable
4.6.1 Description of Accounting Services
Accounting Services provides the following services:
• Managing the monthly closing process including account reconciliations, accounting issue
resolution, and process improvement; preparing standard monthly journal entries and analysis to
support accounting;
• Managing the accounting for fixed assets including: work order creation and set-up; creating and
managing fixed asset records including asset addition, depreciation, retirements, transfers or
adjustments and the preparation of any related journal entries and account reconciliations;
reporting of plant asset information for financial, audits, regulatory reporting, rate cases or other
internal needs;
• Managing the implementation of new accounting pronouncements; providing guidance on
accounting issues; communicating new accounting guidelines and procedures and their impact to
appropriate organizations;
• Managing the financial reporting requirements, including the preparation of financial information
to be included in regulatory reports filed by management, including the annual report;
• Managing the accounting related to taxes other than income taxes such as property taxes.
• Managing the accounting related to inventory and accounts receivable accounts
• Supporting the operations for all other matters related to the accounting for transactions in
accordance with generally accepted accounting principles in the United States of America.
There are thirty employees that provide these services at SM&S, of which twenty-one provide services to
the regulated business, five provide services to the non-regulated business units, and four provide services
to all business units. They report to the Controller and Chief Accounting Officer.

Accounts Payable Services includes the following:
• Process and pay vendor invoices for goods and services purchased in accordance with the company’s
policies and procedures
• Research and provide payment details to internal and external vendors when requested
• Conduct problem resolution when necessary as it relates to invoice payment and processing
• Train employees on existing and new procedures related to the accounts payable process and controls
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There are five employees that provide these services at SM&S, of which three provide services to the
regulated business, and two provide services to the non-regulated business units. They report to the
Controller and Chief Accounting Officer.
4.6.2 Results of Accounting Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Accounting Services with the
median of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 199 - $ 199 $ 140
As shown above, the total cost of Accounting Services to SWPA is $199K
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is well above the Median.

Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $199K or
42% above the median.
Accounting Services ($000)
Peer Group Median $ 140
2019 SWPA Actual Costs $ 199
SWPA Costs vs. Peer Median $ 59
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4.6.3 PA Comment on These Results
As a separate legal entity, SWPA requires resources needed, for example, to develop and provide both
financial statements and regulatory reports. The time and effort to perform these services is not
proportionate to the size of the company. All peer panel members were significantly larger in size than
SWPA. Consequently, when normalizing down to the size of SWPA, the peer panel median – which
represents the cost of approximately one FTE – takes significant advantage of economies of scale. In our
opinion, accounting services required for a Company the size of SWPA cannot be provided by a single FTE.
4.6.4 Market information for Accounting Services
Currently Outsourced Services
In 2019, the amount outsourced totaled $1.1M, or 25.2%, of total Accounting spend for the year. The
majority of these outside services costs relate to external audit fees. In addition, Accounting Services
augmented its staff to manage vacancies, peak workloads, etc.
Appropriateness for Third Party Provisioning
Accounting Services in the utility industry require specific knowledge of regulatory accounting as well as
the various technologies used in the industry. In addition, detailed knowledge of departmental budgets
and IT systems would make outsourcing unadvisable. For these reasons and those discussed previously,
in our opinion, it would not be prudent to source Accounting Services from third parties.
Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management. Based on
Company provided data, the staff augmentation fees for Accounting Services are lower on average than the
Company’s internal billing rate for similar services.

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4.7 Corporate Tax Services
4.7.1 Description of Corporate Tax Services
Corporate Tax Services includes the following:
• Develop long-range tax planning to optimize tax positions for the Company; this also involves
analysis of laws and regulations as they impact the company’s interest;
• File federal, state and local tax returns and defends all related income tax audits as well as all
applicable sales, use, and gross receipts tax returns; and,
• Ensure proper accounting in all tax accounts.
Corporate Tax related services above, are performed by the Director of Tax Compliance, which is also a
part of the Chief Financial Officer’s organization. There are seven employees that provide these services
at SM&S, of which four provide services to the regulated business and three provide services to all
business units.
4.7.2 Results of Corporate Tax Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Corporate Tax Services with
the median of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 88 - $ 88 $ 23
As shown above, the total cost of Corporate Tax Services to SWPA is $88K
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is well above the Median.
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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $88K or
282% above the median.
Tax Services ($000)
Peer Group Median $ 23
2019 SWPA Actual Costs $ 88
SWPA Costs vs. Peer Median $ 65
4.7.3 PA Comment on These Results
In 2019, SUEZ was still incurring extraordinary costs needed to comply with the Tax Cuts and Jobs Act of
2017. The peer panel median, which was based on 2016 costs inflated to 2019, would not have included
any costs associated with compliance with the 2017 TC&JA. Based on our experience, all utilities incurred
significant incremental costs associated with complying with the Act. In our opinion, these compliance
activities contribute significantly to the difference noted above.
4.7.4 Market information for Corporate Tax Services
Currently Outsourced Services
SM&S Corporate Tax Services currently outsources a significant amount of work. In 2019, the amount
outsourced totaled $1.1M, or 43.6%, of total corporate tax spend for the year.
IRS tax risk and controversy consulting services provided by Deloitte make up approximately $300k of the
$1.1M total services outsourced. Other services outsourced include the review of federal and state income
tax returns, and software implementation.
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Appropriateness for Third Party Provisioning
Compliance with IRS, state and local tax regulations is complex. It is common for utilities to use
professional services providers to assist with the preparation of, or the review of, tax returns prior to filing.
Available Market Information
Comparable data was not analyzed for Corporate Tax outsourced services, as these services are usually for
specific expertise and skills which are not provided internally.
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4.8 Treasury Services
4.8.1 Description of Treasury Services
Treasury Services include:
• Short term borrowing and investing, including activities such as, rating agency activity or issuance
fees, money, cash pooling, EFT originations, tax payments, FX processing, intercompany loans
administration of transactions and daily settlement, determining daily cash position, and costs for
issuing and paying agents;
• Bank Administration and KYC updates
• Assist with financial statement disclosures as they pertain to long term debt, short term facilities and
covenant compliance requirements.
• Daily cash account reconciliations, internal treasury workstation administration; bank or third-party
fees, such as service charges, positive pay fees, and security related fees for both utility and non-
utility account; all bank credit facility costs (e.g. bank lines, credit lines, revolvers) including any
upfront fees and on-going fees;
• Develop a long-range financing and dividend strategy consistent with the targeted credit profile,
setting balance sheet targets, developing and recommending hurdle rates for the company’s business
lines; and,
• Rating agency relations includes managing communications with the agencies and includes annual
rating maintenance fees.
There are four SM&S employees who provide these and other Treasury Services to all business units, no
employees dedicated to the regulated or non-regulated business. These employees report to the Vice
President, Treasurer.
4.8.2 Results of Treasury Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Treasury Services with the
median of our panel.
SM&S Cost
Allocated to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 102 - $ 102 $ 57
As shown above, the cost of Treasury Services to SWPA in 2019 is $102K.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is below the peer median.
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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $102K,
which is 79% above the median.
Treasury Services
($000)
Peer Group Median $ 57
2019 SWPA Actual Costs $ 102
SWPA Costs vs. Peer Median $ 45

4.8.3 PA Comment on These Results
The variance to the peer group median is likely due to economies of scale and the impact of normalizing
to a Company the size of SWPA. The peer panel median, which represents approximately .25 FTE, does
not reasonably compare to the resources required to provide these services to SWPA.
4.8.4 Market Information for Treasury Services
Currently Outsourced Services
Virtually no Treasury Services are outsourced.
Appropriateness for Third Party Provisioning
Treasury Services is an integral part of SWPA’s financial processes. Many of the functions performed have
a direct impact on SWPA ratepayers by developing financing plans that reduce revenue requirements
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while obtaining capital required for expenditures that effect service and reliability. This requires not only
keen finance skills but also solid knowledge of the financing markets available to the utility industry. For
these reasons and those discussed previously, in our opinion, it would not be prudent to outsource
Treasury Services.
Available Market Information
Not applicable

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4.9 Procurement Services
4.9.1 Description of Procurement Services
• Procurement Services includes procurement planning and scheduling:
o RFP, RFQ, RFI creation
o Management of the bidding process which consists of bidder selection, invitation, bid package
preparation and distribution, bid evaluations, vendor selection, and contract award
o Contract and task order creation and processing
o Supplier screening and vetting
o Issue of Purchase Orders and supplier follow-up
o Administration of PCard program
o Administration of fleet and travel services
o Administration of various telecommunications programs, specifically mobile/wireless
services.
o Certificate of Insurance maintenance for contracted suppliers
o Invoice preparation and processing for certain programs such as copiers.

There are fourteen employees providing Procurement Services at SM&S, of which seven provide services
to the regulated business, two provide services to the non-regulated business units, and five provide
services to all business units. Procurement Services are the responsibility of the: Sr. Director Utility
Procurement, VP Indirect Procurement, and Sr. Director SM&S Procurement.

4.9.2 Results of Procurement Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Procurement Services with
the median of our panel.
The table below shows this cost as compared to the peer panel median for this Service.
SM&S Cost
Allocated to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 115 - $ 115 $ 223
The cost for Procurement Services to SWPA in 2019 was $115K.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is below the peer median.
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Looking at our analysis another way, the table below shows that the actual costs to SWPA are $115K,
which is 48% below the median.
Procurement Services
($000)
Peer Group Median $ 223
2019 SWPA Actual Costs $ 115
SWPA Costs vs. Peer Median ($ 108)
4.9.3 PA Comment on These Results
None
4.9.4 Market Information for Procurement Services
Currently Outsourced Services
In 2019, the amount of SM&S Procurement Services outsourced totaled $110k, or 7.1%, of total
Procurement spend for the year. A large amount of these are related to temporary employees and legal
fees. Legal fees are related to a lawsuit from a former department employee and legal support for a fleet
leasing contract.
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Appropriateness for Third Party Provisioning
Procurement Services requires specific and detailed knowledge of the water utility business and
contributes the most value to the business when it is tightly integrated with utility operations. PA does
not consider this service as a candidate for third party sourcing.
Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management. Based on
Company provided data, the staff augmentation fees for Procurement Services are lower on average than the
Company’s internal billing rate for similar services.
Comparable data was not analyzed for other Procurement outsourced services, as these services are usually for
specific expertise and skills which are not provided internally.

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4.10 Legal Services
4.10.1 Description of Legal Services
The Legal Department comprises a multidisciplinary team of legal, insurance and compliance professionals
who support the water, wastewater and recycling operations of SUEZ NA.
Legal provides the following services:
• Legal counsel and representation, litigation and legal risk management, contract drafting and
review, compliance oversight and other services and counsel to all divisions and corporate
departments within the Company.
o As part of the above services, Legal provides counsel in decision-making to the Chief
Executive Officer, the Executive Committee (ExCom), Division Presidents, Directors, Vice
Presidents and other individuals acting in their capacity as employees of SUEZ NA.
o Legal also provides advice on the legal implications of policy and other decisions under
applicable laws, rules, regulations and corporate policies, in addition to representing the
Company in litigation matters, administrative and regulatory hearings, and significant
business transactions.
Insurance provides the following services:
• Evaluation of the Company’s corporate insurance and surety bond programs, which includes:
o negotiating and placing coverage;
o providing data for off-balance-sheet reporting to SUEZ Group;
o selecting appropriate insurance limits, deductibles and surety capacity;
o selecting and managing brokers who provide insurance and surety support services, and
negotiating their compensation;
o reviewing, evaluating and providing recommendations for proposed business contracts
in order to identify and mitigate potential liability;
o providing insurance pricing for existing contracts and backup support for rate cases;
o establishing and managing the annual insurance and claims deductible budget and
expense;
o managing the annual actuarial review of reserve analysis of deductible losses;
o managing the claims handling process for workers’ compensation, auto liability and
general liability; and
o reporting and managing claims for all lines of coverage except auto and general liability.
Enterprise Risk Management and Corporate Compliance provides the following services:
• Responsible for implementing and managing the ERM program for the North America Business
Units. The team ensures all departments, operations and processes work together in a consistent
and integrated manner, with the overall objective of mitigating risks to the extent reasonably
practicable.
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• Responsible for coordinating and implementing the Company’s compliance improvement
initiative as part of the overall compliance strategy. The team is charged with helping to build an
effective compliance program for North America, which includes:
o promoting compliance awareness through training and communication;
o developing Company policies and procedures;
o liaising with compliance professionals in other departments (e.g., EH&S, IT, Finance) to
identify and close compliance gaps;
o engaging senior and middle management to lead by example;
o emphasizing confidential reporting by employees; and
o creating incentives to reward lawful conduct by employees.
Legal Services are the responsibility of the General Counsel of SUEZ NA. There are nineteen employees
that provide these services at SM&S, of which three provide services to the regulated business, four
provide services to the non-regulated business units, and twelve provide services to all business units.
Details of each legal department hierarchy is provided below.
Within Legal, there are four teams of attorneys and non-legal staff that support (i) the Utility Division, (ii)
the Environmental Services Division (including Business Development), (iii) Advanced Solutions, and (iv)
Litigation. Each team is led by a Senior Corporate Attorney who has hierarchical (direct line) reporting to
the General Counsel of SUEZ NA. The Senior Corporate Attorney for each of the Utility Division,
Environmental Services and Advanced Solutions has functional (dotted line) reporting to their respective
Division President.
The Insurance team is led by an Insurance Director and includes a Corporate Insurance Specialist and a
Claims Specialist. The Insurance Director has hierarchical (direct line) reporting to the General Counsel of
SUEZ NA and functional (dotted line) reporting to the SUEZ Group Director of Insurance.
The ERM and Corporate Compliance team is led by a Senior Director and includes a Corporate Compliance
Manager. The Senior Director has hierarchical (direct line) reporting to the General Counsel of SUEZ NA
and functional (dotted line) reporting to the SUEZ Group Director of Risks and Investments.
4.10.2 Results of Legal Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Legal Services with the median
of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 263 - $ 263 $ 279
As noted above, the cost for Legal Services to SWPA in 2019 was $263K.
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The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is below the peer median.

Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $263K or
6% below the median.
Legal Services
($000)
Peer Group Median $ 279
2019 SWPA Actual Costs $ 263
SWPA Costs vs. Peer Median ($ 16)
4.10.3 PA Comment on These Results
None
4.10.4 Market Information for Legal Services
Currently Outsourced Services
In 2019, the amount of Legal services outsourced totaled $297k, or 4.0%, of total SM&S Legal Services
spend for the year. Based on our knowledge of industry practices, this percentage is very low. However,
we learned that most legal services provided by outside law firms are direct charged to the entity
requesting those services and not to the SM&S Legal Services department. When these outsourced legal
services are considered, we believe the Company’s use of outsourced legal services is in line with common
industry practices.
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Based on discussions with the SVP and General Counsel of SUEZ NA, following her arrival a significant
effort was made to obtain efficient, cost effective and high-quality legal representation through mutual
commitment. This was established by launching an RFP for Legal Services in October 2017, which resulted
in a roster of preferred law firms that offered substantial discounts, effectively keeping the rates
unchanged for at least two years. A review of the attorney level at outside firms performing the work also
helped keep costs down (i.e., having senior associates instead of law firm partners performing the work,
where practicable). The majority of the Company’s legal work is now performed by its team of in-house
attorneys and paralegals, with selected firms being used for Regulatory matters, Real Estate and Title,
Litigation, Intellectual Property, and special one-off legal matters that may arise.
There is currently one internal resource in the Company dedicated to SWPA matters. Most day-to-day
operations are handled internally though this SWPA attorney who is also responsible for SWNJ and SWID.
This attorney, along with the General Manager of SWPA, would be notified at all times when outside
counsel is brought in to advise on SWPA matters. Outside counsel works closely with the General Manager
of SWPA as well as the SWPA attorney. To ensure optimal efficiency, the General Manager of SWPA and
the attorney are copied on all emails from outside counsel. Consistent with the Company’s law firm billing
guidelines, outside counsel firms are required to submit invoices to Legal through its electronic billing
system (CounselLink®).
There is primarily one law firm, Cozen O'Connor P.C., that is used for most legal matters for SWPA. This
outside counsel firm is used mainly for rates and regulatory matters given their state and local expertise
and institutional knowledge of the Company. From time to time, another law firm may be brought in if
specific local knowledge (i.e., town or village etc.) is needed. Legal uses a similar approach for outside
counsel firms in each state in which the Company conducts business.
The fees associated with outside counsel are directly billed to SWPA for all matters excluding litigation and
contract disputes. These costs are billed to SM&S and allocated to the business units.
As a result of the changes in how outside counsel is selected and managed, the historical costs of
approximately $5.0M - $5.5M that was direct charged to SUEZ NA business units as well as SM&S are now
trending downward. The amount direct charged to SWPA in 2019 was $470k primarily related to real
estate easement, and acquisitions.
Appropriateness for Third Party Provisioning
There are certain Legal Services that can be prudently outsourced, at least in part, given that the
governance remains at SM&S. As discussed above, the Company’s use of outside law firms to provide
certain legal services is reasonable and consistent with common industry practices and the oversight of
the services provided by SM&S Legal Services is appropriate.
Available Market Information
The legal work routinely outsourced is usually of a complicated, specialized nature where the Company is
seeking to obtain specialized knowledge and expertise and/or lawyers with a license to practice in certain
jurisdictions for litigation and corporate matters. Senior-level legal resources are typically selected for
these assignments based on the possession of these specialized, unique skills and qualifications.
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Based on the favorable position of SWPA versus the peer panel median, PA did not review market
information for Legal Services.

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4.11 Information Technology

4.11.1 Description of Information Technology Services
Information and Operations Technology Services include:
• Development of technology vision, strategy, and a roadmap, and lead the IT team and its business
partners in effective execution.
• Ensure, on an ongoing basis, that current and planned technical architecture, investments and
solutions are aligned with company business objectives.
• Prepare and monitor IT operational budgets that meet prevailing objectives and constraints.
• Develop and execute an analytics program that will allow company business leaders to make data-
based decisions.
• Direct the design, planning, implementation, and maintenance of the computing infrastructure
that supports the company’s operations and business applications.
• Establish metrics for managing IT effectiveness and for measuring the impact of IT on the business.
• Establish appropriate service levels and the processes to ensure that KPIs are met.
• Maintain oversight of all IT projects, ensuring that commitments are properly planned, staffed,
monitored and reported.
• Establish a comprehensive enterprise information security program to ensure the integrity,
confidentiality and availability of relevant data
• Operate and monitor data center infrastructure and applications, backup & restore services,
change management administration, batch job management, hardware and software installation
and decommissioning;
• Support, problem resolution, and the application of minor enhancements, upgrades and patches
to applications;
• Develop, support and manage methodologies and measurements for effective delivery of
business solutions; and,
• Design, develop, test and implement new information technology and new information
technology standards and tools for computing environments.
• Provide support center user interface as well as Tier 1 and Tier 2 support for End User support
requests;
• Install, maintain and resolve service problems for end user computing devices, networks,
business/operational/customer systems;
• Manage the installation, operation, and on-going network security administration including
identity and access management, user provisioning, access control, monitoring and managing
security systems including firewalls, IDS/IPS, and event management systems, vulnerability
management (patching and antivirus administration), etc.;
• Architecture design, implementation, technical support, problem resolution, application of minor
enhancements, upgrades and patches for operating and financial systems;
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• Monitor security events, assists with information gathering for required system audits and
provides project management support for new system implementations, upgrades and
enhancements;
• Implement the cyber security policies and controls development and architecture evaluation of
security solutions and it monitors alignment with best practices, incident response planning, and;
• Manage equipment, service and usage expenses paid to telecom providers for phone, data
circuits, Internet, etc. This includes WAN costs such as fiber backbone or microwave, whether
those WAN costs are external service provider costs or are provided by internal resources.
• Manage and deliver an integrated omni-channel Customer Experience (CX) Strategy
• Define and drive ongoing cycle of improving the Customer Experience across cross functional
teams
• Develop and maintain value-adding relationships with external partners in support of both CX
Strategy as well as Customer Operations to drive program success (including Payment, Billing,
Hosting, Web Development, Journey Mapping, Call Center, etc.)
There are seventy employees that provide these services at SM&S, of which thirty-seven provide services
to the regulated business, two provide services to the non-regulated business units, and thirty-one provide
services to all business units. Information Technology Services (known internally as Business Technology
Services) are the responsibility of the SVP, Chief Information and Digital Officer.
4.11.2 Results of Information Technology Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Information Technology
Services with the median of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 1,208 $ 614 15 $ 1,214 $ 1,760
As noted above, the cost for Information Technology Services to SWPA in 2019 was $1.2M.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is well below the peer median.

14 In 2019, $6K in IT hardware costs were direct charged to SWPA.14
15 SM&S owns various IT assets, both hardware and software. Depreciation of these assets is allocated to affiliates
based on the Company’s Cost Allocation Manual. In 2019, the amount of depreciation allocated to SWPA was
approximately $400k. For IT assets placed in service at SM&S in 2019, SWPA’s share of these costs, which is not
allocated to SWPA but does represent costs included in the peer panel data, was approximately $300k.

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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $1.2M,
which is 31% below the median.
IT Services
($000)
Peer Group Median $ 1,760
2019 SWPA Actual Costs $ 1,214
SWPA Costs vs. Peer Median ($ 546)
4.11.3 PA Comment on These Results
The cost of IT services charged to SWPA is reasonable.
4.11.4 Market Information for Information Technology
Currently Outsourced Services
Information Technology typically sources a significant number of services to third-party suppliers. Data
provided to PA shows Information Technology spent $13.6M for outside services in 2019. PA adjusted this
amount to re-class outsourced services provided by ADP related to Payroll Services to Human Resource
Services. The remaining portion of IT outsourced service total $12.9M or 46.8% of the 2019 IT spend.
Although the majority of the $13.6M total is related to outside services, included are items related to staff
augmentation which we are not considering as outsourced services for the purposes of this report, and
license & maintenance agreements which make up $3.5M. Management noted Information Technology
outsourced services include outsourced services from other SM&S functions for the benefit of the
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Information Technology department, which total approximately $1.2M. For example, payroll services
related to the HRS system is included as part of the Information Technology outsourced services for the
portion of services that benefit the Information Technology department. Also included in the $13.6M total
are chargebacks from the Parent company related to Microsoft Office 365 which total $1.2M, and the
outsourced Payroll service to ADP.
Shown below are some of the large Information Technology outsourced service providers used.
Outsourced Service Provider Service Providing Cost to SWPA
($000)
Equinix Data Center Operations $514
CenturyLink & Presidio Networked
Solutions
Network Services $1,000
CapGemini Finance Systems Consulting $710
Navisite Operations and Maintenance of the
Peoplesoft Finance System
$767
Workforce Logiq Staff Augmentation $1,732
Esri GIS Services $700 - $800
Infor Asset Management System ~$700

Appropriateness for Third Party Provisioning
Many Information Technology services are suitable for sourcing to third parties. In discussions with
management, PA learned that SUEZ prefers to keep strategic Information Technology related activities in-
house. For example, SUEZ’s billing and asset management systems were bought as an off-the-shelf product
but configuration is done internally. The helpdesk center operations are also performed internally as the
Company found an internally managed helpdesk center offers better customer satisfaction results and is
more cost efficient then an outsourced alternative.
Services the Information Technology department currently outsources include; power calling and internet
connectivity for the data center operations which are outsourced to Equinix, network services (i.e., WAN)
are outsourced to CenturyLink (wires and local area networks are managed internally), the GIS system is
outsourced to Esri, telecom infrastructure is outsourced to RingCentral, and a small portion of Call Center
telephony & IVR solutions are outsourced to RingCentral and Incontact at the SM&S level (the rest being
expensed at the business unit level).
For Cyber Security, the Company employees an internal team for first responders and risk management, if
an event where to occur, SUEZ secured Global Digital Forensics on retainer.
PA finds the Information Technology services outsourced by SUEZ to be reasonable and of a typical
Information Technology department.
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Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management.
Based on Company provided data, the staff augmentation fees for Information Technology Services are
higher on average than the Company’s internal billing rate for similar services.
Comparable data was not analyzed for other Information Technology outsourced services, as these
services are for specific expertise and skills which are not provided internally.
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4.12 Human Resource Services
Human Resource Services includes Payroll Services.
4.12.1 Description of Human Resource Services
Human Resource Services
• The recruitment, screening, and selection of internal and external candidates;
• Establishing relocation programs and management of employee relocations, including all
administration and execution costs of the relocation program;
• Design and administer compensation processes including job evaluations, annual salary planning,
incentive programs, executive compensation, deferred compensation, long term incentive
programs;
• Design, management and implementation of health, prescription, life insurance, disability,
pension and retirement, reimbursement accounts, employee assistance programs, and other
benefits for all employees;
• Manage strategy, negotiations, and contract interpretation for collective bargaining agreements
with labor unions. This includes arbitration resolution, mutual gains bargaining, local
management support on grievances, discipline, adherence to the contract and training;
• Identification, development, and delivery of training programs to enhance the skills and
capabilities of the workforce;
• Provide support on Human Resources technology and processes, technology strategy and
solutions, portfolio management, corporate and ad hoc reporting, data analysis, data integrity
and oversight, and system testing; and, process and release management;
• Succession planning, performance management, career development, mentoring, executive
coaching, career planning & development, and employee/organizational assessments;
• Management and administration of all short and long term disability programs and FMLA,
whether done internally or by a third party; disability insurance premiums, if any, and the cost of
claims for self-insured programs and insured programs with a deductible; medical services
required by the Company for disability cases, such as second opinions, consultations, etc.;
disability case management and return to work programs; investigations of short term disability
claims; legal services, whether internal or external, related to disability cases;
• Develop and implement culture and engagement strategy and initiatives, including employee
communications and feedback, wellbeing activities, organization assessments, etc.
There are twenty-three employees that provide these services at SM&S, of which two provide services to
the regulated business, four provide services to the non-regulated business units, and seventeen provide
services to all business units. Human Resource Services responsibility is with the Vice President, Human
Resources organization.
Payroll Services
• Payroll Services have been partially outsourced to ADP. With the assistance of the SM&S Payroll
department, these Services include: the issuance of employee payroll checks as well as processing
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employee withholding information, tax withholding deposits, quarterly payroll tax returns, payroll
calculations, annual W-2s and government reporting; processes pay adjustments; special pays,
including stock related payments, short term disability, workers compensation and garnishments;
preparing payroll tax filings; printing, stuffing, and distributing pay checks and electronic deposit
statements;
• SM&S Payroll provides support for employee calls concerning time and attendance issues, as well
as pay & recognition related issues (i.e., paycheck, final paycheck, sick time, vacation time, floating
holidays, etc.); and, M&S payroll calculates the vacation carryover from one year to another as
well as other paid time off categories, handle certified prevailing wage requirements, audits, etc.
• SM&S Payroll also provides assistance to the timekeeping system and its users to troubleshoot
time entry issues, determine how business processes impact time entry rules, maintain time entry
tables such as job substitution and prevailing wage, answer time entry questions, create reports
on time entry data, training to employees on time entry and issue communications about time
entry/work rules and deadlines.
There are six SM&S employees who provide Payroll Services to all business units, no employees dedicated
to the regulated or non-regulated business. Payroll Services responsibility is with the Senior VP of HR.
There are no embedded SWPA employees providing Payroll Services.
4.12.2 Results of Human Resource Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Human Resources Services
with the median of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 275 $ 48 $ 323 $ 307
As shown above, the cost for Human Resource Services provided to SWPA in 2019 was $323K.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is above the peer median.
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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $323K,
which is 5% above the median.
HR Services
($000)
Peer Group Median $ 307
2019 SWPA Actual Costs $ 323
SWPA Costs vs. Peer Median $ 16

4.12.3 PA Comment on These Results
SWPA HR Services costs are reasonable compared to the median of the peer panel.
4.12.4 Market Information for Human Resource Services
Currently Outsourced Services
Payroll Services have been outsourced to ADP. The total amount of Payroll services outsourced in 2019
was $726k, or 79.1%, of total Payroll spend for the year.
The remaining amount of outsourced Human Resource services total $771k. The majority of these costs
are related to legal advice and services for employment and benefits topics (i.e., Health and Benefits,
Actuary fees, retirement, 401(k), etc.), background checks for pending new hires, compliance subscription
for DOT program, and staff augmentation.
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Appropriateness for Third Party Provisioning
As discussed earlier, certain services can be prudently outsourced, at least in part, given that the
governance and strategic aspects of the service are maintained in-house. HR services that are typically
considered for outsourcing include: relocation services;·temporary staffing managed services program; HR
services center; Medicare coordinator; health and welfare annual enrollment support; retiree drug
subsidy reconciliation support; wellness program administration; financial basics training program; HR
survey services; HR coaching; health and welfare plan management & active and retiree annual
enrollment.
Payroll services, which has been aligned with Human Resources for the purposes of this report, are
typically considered for outsourcing as well.
Available Market Information
Not applicable

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4.13 Corporate Communication Services
4.13.1 Description of Corporate Communication Services
Corporate Communication Services include:
• Media Relations: Research and develop media response, positioning, and strategy to respond to media
inquiries or place stories in the media. Develop press releases, arrange interviews, and maintain 24/7
media relations availability. Act as company spokesperson. Also includes communications resources
with respect to corporate responsibility, etc.
• Corporate Awareness Communications or Advertising: General corporate awareness and brand image
purposes, including "issue advertising". Spend includes agency/vendor fees to create and execute
advertising.
• External Informational, Safety, and Educational Communications: Communications or advertising
spend that provides information and educational messaging on topics such as: billing and payment
options, such as e-billing, budget billing, and direct debit; rate options; low-income programs,
consumer protection and privacy rights notices; general water efficiency information; public safety,
including "call before you dig" programs; school education programs; and special educational
programs such as environmental programs.
• Product/Service Promotion: Communications or advertising spend that promotes products or/or
services from which the utility will benefit.
• Internal and Intranet Communications: Internal Communications included Company communications
between employees or departments across all levels, or divisions, of an organization. Intranet
Communications includes posting of content to the internal intranet, managing intranet user
experience, interfacing with IT for intranet administration, measurement and analysis of intranet
traffic and other data.
• External Publication and Communications: Communication targeted for non-employee audiences
(public, media).
• Annual Report: Design, production, printing and distribution of the Annual report, including postage.
• Internet Website Content Development and Maintenance: Development and/or curation of content
for all externally facing company websites.
• Social Media Communications: Management and administration of established corporate social media
accounts, such as Facebook, Twitter, Instagram, and others, and the delivery of content through those
social media channels.
There are six employees that provide these services at SM&S, of which two provide services to the
regulated business, one provides services to the non-regulated business units, and three provide services
to all business units. Corporate Communication Services are the responsibility of the Senior Vice President
of Communications.
4.13.2 Results of Corporate Communication Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
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to the same size as SWPA. The table below shows the actual SWPA costs for Corporate Communications
Services with the median of our panel.
SM&S Cost Allocated
to SWPA
($000)
Embedded SWPA
($000)
Total Cost to SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 49 $ 151 $ 200 $ 223
As noted above, the cost for Corporate Communication Services to SWPA in 2019 was $200K.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is equal to the peer median.

Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $200K,
which is 10% below the median.
Corporate Communications Services
($000)
Peer Group Median $ 223
2019 SWPA Actual Costs $ 200
SWPA Costs vs. Peer Median ($ 23)

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4.13.3 PA Comment on These Results
Corporate Communications costs allocated to and embedded in SWPA are reasonable compared to the
peer panel.
4.13.4 Third Party Sourcing
Currently Outsourced Services
The SM&S Corporate Communications outsources a significant portion of its work. In 2019, $0.7M, or
28%, of its total cost of $2.5M was paid to third party providers. In addition, over $2.0M is additional
outside services costs were incurred by local utilities for conservation programs and lead in water pipes
issues.
Appropriateness for Third Party Provisioning
Many Corporate Communication Services are suitable for sourcing to third parties. These include;
conducting surveys, creating and executing advertising for corporate awareness and brand image
purposes, information and educational messaging services such as billing and payment options, and the
development and maintenance of company websites. SUEZ appears to appropriate use outside resources
as needed for expertise and to supplement staff for temporary needs.
Available Market Information
Not applicable

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4.14 Regulatory Business Services
4.14.1 Description of Regulatory Business Services
The Regulatory Business Services provided by SM&S include:
• Translation of financial data into State regulated revenue requirements, including the preparation
of supporting work papers for rate cases and other regulatory filings;
• Internal and external costs for cost of capital and cost of equity testimony; calculations of formula
rates and filings associated with these calculations;
• Oversight and policy guidance on regulatory proceedings;
• Management and maintenance of routine State economic regulatory relationships and contacts;
Management and maintenance of routine regulatory contacts, with stakeholders;
• Monitors issues and advocates positions in federal regulatory proceedings as they pertain to the
Company's businesses;
• Rate design and tariff administration activities. This also includes tariff interpretation activities,
marginal cost analyses, and the pricing and tariff-related aspects of special contracts requiring
regulatory approval;
• Participation in technical conferences, monitoring regulatory activities, and discussing issues with
PUC staff; and,
• Prepare required State and Federal regulatory reporting for initiatives including service quality
indicator quarterly reports.
There are nine employees providing SM&S Regulatory Business Services including the Vice President,
Regulatory Business. Regulatory Business is under the direction of the Vice President – Rates & Regulatory
Affairs.
4.14.2 Results of Regulatory Business Services Benchmarking
In order to benchmark SWPA costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SWPA. The table below shows the actual SWPA costs for Regulatory Business Services
with the median of our panel.
As noted above, the cost for Regulatory Business Services to SWPA in 2019 was $187K.
The chart below compares this actual total cost with the peer median costs and shows that the amount
allocated to SWPA is above the peer median.
SM&S Cost Allocated
to SWPA
($000)
Embedded
SWPA
($000)
Total Cost to
SWPA
($000)
Peer Panel Normalized
Median Cost
($000)
$ 187 - $ 187 $ 112
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Looking at our analysis another way, the table below shows that, the actual costs to SWPA are $187K,
which is 67% above the median.
Regulatory Business Services
($000)
Peer Group Median $ 112
2019 SWPA Actual Costs $ 187
SWPA Costs vs. Peer Median $ 75
4.14.3 PA Comment on These Results
The cost of Regulatory Business function at any utility is typically related to the regulatory activity in the
jurisdictions it serves. SM&S Regulatory Business supports approximately a dozen regulated affiliates in
several States. These regulated affiliates are typically significantly smaller than the average size of a peer
panel regulated affiliate. Consequently, when normalized to the size of SWPA, peer panel results reflect
significant economies of scale, beyond those available to SUEZ Water.
The use of a consolidated regulatory staff provides SUEZ with opportunities to leverage the capacity of
regulatory staff to manage resources and ensure the consistency of regulatory policies, approaches and
practices.
It is common to use outside experts for rate cases (e.g., depreciation studies, COSS, ROE/Cap Structure
analysis, etc.). These costs do not go through SM&S rather they are treated as deferred costs in the
respective regulated utility for recovery in the specific case.
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4.14.4 Market Information for Regulatory Business Services
Currently Outsourced Services
The Regulatory Business at SM&S regularly engages third parties for expert analysis and testimony during
regulatory proceedings. This is a common practice for specialized services such as depreciation studies,
cost of service studies, and cost of equity studies. In 2019, the amount outsourced totaled $115k, or 5%,
of total Regulatory Services spend for the year.
Appropriateness for Third Party Provisioning
Regulatory Management Services are an integral part of SM&S’s financial and regulatory compliance
processes. Many of the functions performed have a direct impact on SWPA ratepayers by developing
plans that support the revenue requirements to obtain capital required for expenditures that effect
service and reliability. This requires not only keen finance and regulatory skills but also solid knowledge
of regulatory compliance requirements and how they have evolved over time. For this reason, in our
opinion, it would not be prudent to outsource Regulatory Management Services to a third party.
However, due to the need for expert analysis and testimony during regulatory proceedings, it is common
to use consultants on an as needed basis, which is the Company’s practice as well. This is especially
reasonable as these services are only required in connection with the periodic filing of general rate cases.
Available Market Information
PA did not investigate market information for Regulatory Services.

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Scope of the Review
The scope of review of the economic analysis of SM&S services in the aggregate includes the following:
• Identify the current services provided by SM&S at the department level;
• Evaluate the effectiveness and efficiency of the needed services;
• Evaluate the benefit of such services to the customers of the SWPA utility;
• Examine and benchmark the cost of the services provided by SM&S;
• Determine if the provisions of these services are the most cost effective alternative; and,
• Perform a cost benefit analysis comparing SM&S services to alternative outside sources of
equivalent services.
Approach
In order to meet the Commissions requirement to “…conduct internal or external studies to compare SUEZ
Water Pennsylvania Inc.’s intercompany charges for services it provides to or receives from its affiliate”, it
was necessary to determine the total costs of each of the Shared Services provided by SM&S to the
business units.
To assess the effectiveness and efficiency of the needed services, PA compared the total cost of each of
the ten services described below to the normalized peer panel median value of these same services for
the companies participating in PA’s Corporate and Shared Services benchmarking study.
Comparing costs for these ten services in the aggregate to the benchmarking peer panel is critical to
assessing the effectiveness and efficiency of these services. An analysis at this level avoids issues
associated with differing capitalization and cost allocation practices which impact service costs at the
individual operating company (e.g., SWPA) level.
Additionally, for each service provided by SM&S to the SWPA utility, PA performed the following:
• Obtained copies of the monthly SM&S invoices for services billed to SWPA in 2019;
• Obtained financial reports detailing costs direct charged to SWPA related to the Shared Services;
• Provided the Company with an initial data request (IDR), including a request for the department
which provides the services of approximately 250 sub-processes typically included in Shared
Services provided to affiliate companies;
• Reviewed responses to the IDR as well as follow-up requests to SM&S;
• Interviewed SM&S and SWPA employees, as needed; and,
APPENDIX A – ECONOMIC ANALYSIS
RESULTS FOR SM&S SERVICES (TOTAL
COST)
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• Completed the benchmarking model and analysed results.
Services Included in Our Report
For the purposes of our Review, we selected Shared Services categories that are typical of Shared Services
Companies and are aligned with the SWPA processes. These are:
1. Financial Planning, including:
a. Financial Planning
b. Budgeting & Analysis
c. Management Reporting
d. Internal Control
2. Accounting, including:
a. General Accounting
b. Accounting Policy
c. External Reporting
d. Non-Income Taxes
e. Accounts Payable
3. Corporate Tax
4. Treasury, including:
a. Cash Management
b. Corporate Finance
5. Procurement
6. Legal, including Insurance & Enterprise Risk Management and Corporate Compliance
7. Information Technology
8. Human Resources, including Payroll
9. Corporate Communications, including:
a. Media Relations
b. Stakeholder Communications
c. Employee Communications
10. Regulatory Business
This Report is organized around these ten Shared Services.
Mapping Departments to Shared Services
The first step was to map each peer panel sub-process to one of the ten SM&S Shared Services
Departments above. This started with a rigorous data request of information from the Company that
matches the sub-process received from the other utilities in our peer panel to SM&S department numbers
provided by the Company.
The Company filled out PA’s template which includes approximately 250 sub-processes related to a vast
array of shared services provided to utility affiliates. Below is an example of this template which was sent
to the Company as a data request.

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Portion of Benchmarking Template for Communications and Advertising
Process Definition Account Sub process Department #
Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA06b
Administration of
Charitable
contributions,
corporate
sponsorships, and
charitable foundations

Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA09 Annual Report
Communications
and Advertising
Total costs for media relations,
corporate marketing,
sponsorship, website
architecture and external
reports
CA06
Charitable
Contributions -
Calculated

Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09 Claims
Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09b Claims against the
Company
Corporate
Administrative
Services
Total costs for performance
analysis, improvement
initiatives, record management,
library and travel services
CAS09a Claims by the
Company

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In 2019, SM&S consisted of 26 departments which had costs associated with providing Regulated and
Shared Service services. The following table identifies SM&S costs for Regulated and Shared Service
services provided by each of the 26 departments to the in 2019.
SM&S Departments
SM&S Department SM&S Costs ($000))
Accounts Payable $456
Administration_General $2,426
BTS - Define $3,388
BTS - Deliver $2,706
BTS - Operate $21,522
Capital Management $1,778
Corporate Communications $2,461
Corporate Office Support $1,003
Customer Service Admin $1,754
Environmental Health & Safety $1,501
External Affairs $2,082
Financial Planning $3,994
General Accounting $5,202
HR - Shared Services $368
HR CA SS Shared Services $505
Human Resources $3,621
Insurance $4,044
IT Depreciation $5,277
Legal $3,432
Office of the President - Divisions $1,537
Payroll $918
Procurement $1,560
Rate Department $2,221
Taxes $2,486
Technical Services $2,750
Treasury $1,919

From these 26 departments shown in the above table, 18 align with PA peer panel processes. The table
below shows where each of the 18 Department’s costs were accounted for in this report.
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SM&S Departments Mapped to The Ten Processes In Our Report
Department
Number SM&S Department Mapped to Shared Service:
500 General Accounting
Accounting Services
501 Accounts Payable
520 Corporate Tax Corporate Tax
405 Corporate Communications Corporate Communications
530 Financial Planning Financial Planning
415 Human Resources
Human Resources 416 / 418 HR - Shared Services
515 Payroll
424 BTS - Define
Information Technology 425 BTS - Operate
426 BTS - Deliver
610 Legal
Legal
611 Insurance
443 / 445 Procurement Procurement
800 Rate Department Regulatory Business
605 Treasury Treasury

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Total Cost of SM&S Services
The Table below shows the total costs of Shared Services to be $66.4M. These costs, referred to from here
on as SUEZ Water, represent the cost of SM&S services provided exclusively to the Regulated business
units and the cost of SM&S services provided to all business units.16 Costs related to services provided
exclusively to Non-Regulated business units are excluded from this analysis.
In total, SM&S costs retained at Corporate and not allocated increased by over $10M from 2018 to 2019,
reflecting legal fees incurred to complete a transaction with PGGM (Dutch Pension Fund) acquiring 20% of
the Utility Division starting 3/01/2019 as well as an agreement with PGGM to exclude certain corporate
costs from the allocation to the regulated utilities. This change resulted in a lesser amount of SM&S costs
allocated to the regulated utilities.

TOTAL COST OF SHARED SERVICES
Service 2019 Total M&S Cost
($000)
Accounting Services $4,780
Corporate Communications 6,838
Financial Planning 5,779
Human Resources 6,600
Information Technology 27,194
Legal 5,861
Procurement 2,529
Regulatory Business 2,354
Corporate Tax 2,486
Treasury 1,964
Total $66,385
The following chart shows the relative size of each Shared Service.

16 The business units included in SUEZ Water, as defined above, fall under department 305 which represent services for all
companies and 987 which represent services to the Regulated companies. Departments 986 and 988, which represent the Non-
Regulated companies, are excluded from this analysis.
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2019 Shared Services Costs

Costs Not Reviewed
Certain SM&S Department costs are not reflected in the cost of the ten shared services benchmarked.
These include the following departments:
• Administration-General
• Capital Management
• Corporate Office Support
• Customer Service Admin
• Environmental Health & Safety
• External Affairs
• Office of the President - Divisions
• Technical Services
These functions represent approximately 18 percent of total SM&S departmental costs. This is consistent
with other corporate and shared services benchmarking studies we have performed, in which
approximately 70 percent of total service company costs are typically benchmarked.
The reasons for excluding these functions from the current study include a lack of comparable peer panel
data and costs are not allocated to the regulated segment including SWPA.
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Cost of SM&S Shared Services - Summary
We have benchmarked the ten services we identified, including the cost of employees embedded in the
business units.
As shown in the table below, the aggregate cost for these Services is $65.5M which is 10% higher than the
peer panel median on a normalized basis.
SM&S
Shared Service
Peer Median Cost
($000)
SM&S Cost
($000)
Difference
($000)
Accounting Services $2,418 $4,780 $2,362
Corporate Communications 4,640 6,838 2,198
Financial Planning 3,989 5,779 1,790
Human Resources 5,313 6,600 1,287
Information Technology 30,450 27,194 (3,256)
Legal 5,488 5,861 373
Procurement 3,861 2,529 (1,332)
Regulatory Business 1,929 2,354 425
Corporate Taxes 402 2,486 2,084
Treasury 980 1,964 984
Total $59,470 $66,385 $6,915
Financial Planning Services
A.8.1 Description of Financial Planning Services
Financial Planning Services include:
• Assessing the business environment; identification of key issues; developing business unit strategies
and objectives, and examination of alternatives; developing multi-year earnings, margin, cash, O&M,
and capital plan; modelling the financial impact of new capital investments and balance sheet
restructuring; forecasting for regulatory filings; performing analytic support for external
stakeholders, and governing corporate capital expenditures;
• Develop business unit and department financial business plans for the next year including earnings,
margin, cash, O&M and capital plans;
• Perform analysis of results and prepares variance commentary for earnings, margin, O&M, and
Capital within the Company and business unit;
• Prepare and revise forecasts for earnings, margin, cash, O&M, and Capital within the business units;
and,
• Review actual information and projects the remainder of the current year future years. This function
performs “what-if” analysis for various scenarios for business unit decision-making.
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Financial Planning Services are the responsibility of the Finance Director, Finance Staff, Financial Control
& Corporate Finance within the Senior Vice President & Chief Financial Officer organization. There are
twenty-one employees providing Financial Planning Services at SM&S, of which six provide services to
the regulated business, nine provide services to the non-regulated business units, and six provide
services to all business units.

A.8.2 Results of Financial Planning Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Financial Planning Services with the median of our panel.
SM&S Financial Planning Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$5,779 $3,989
The chart below shows the total Financial Planning Services costs compared to our panel. As can be seen,
the total SM&S costs for this service are well above the median.

A.8.3 PA Comment on These Results
In our opinion, Financial Planning costs are significantly higher than the peer panel median due to the
significant number of affiliates comprising SUEZ NA to which financial planning services are provided.
A.8.4 Market information for Financial Planning Services
Currently Outsourced Services
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No SM&S Financial Planning Services are outsourced.
Appropriateness for Third Party Provisioning
The services provided by Financial Planning routinely deal with confidential and sensitive issues, require
specialized skills and require Company and industry-specific knowledge. They are not routine and
transactional in nature, which often are typify services likely to be outsourced.
For these reasons, in our opinion, it would not be prudent to outsource Financial Planning Services from a
third party.
Available Market Information
Not applicable
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Accounting Services
We have included the following cost pools in Accounting Services:
1. Accounting (General accounting, accounting policy, external reporting, cost accounting, regulatory
accounting & fixed assets, and non-income tax department – including property, GREFT tax filings,
etc.)
2. Accounts Payable
A.9.1 Description of Accounting Services
Accounting Services includes the following:
• Managing the monthly closing process including account reconciliations, accounting issue
resolution, and process improvement; preparing standard monthly journal entries and analysis to
support accounting;
• Managing the accounting for fixed assets including: work order creation and set-up; creating and
managing fixed asset records including asset addition, depreciation, retirements, transfers or
adjustments and the preparation of any related journal entries and account reconciliations;
reporting of plant asset information for financial, audits, regulatory reporting, rate cases or other
internal needs;
• Managing the implementation of new accounting pronouncements; providing guidance on
accounting issues; communicating new accounting guidelines and procedures and their impact to
appropriate organizations;
• Managing the financial reporting requirements, including the preparation of financial information
to be included in regulatory reports filed by management, including the annual report;
• Managing the accounting related to taxes other than income taxes such as property taxes.
• Managing the accounting related to inventory and accounts receivable accounts
• Supporting the operations for all other matters related to the accounting for transactions in
accordance with generally accepted accounting principles in the United States of America.
There are thirty employees that provide these services at SM&S, of which twenty-one provide services to
the regulated business, five provide services to the non-regulated business units, and four provide services
to all business units.
Accounts Payable Services includes the following:
• Process and pay vendor invoices for goods and services purchased in accordance with the company’s
policies and procedures
• Research and provide payment details to internal and external vendors when requested
• Conduct problem resolution when necessary as it relates to invoice payment and processing
• Train employees on existing and new procedures related to the accounts payable process and controls
There are five employees that provide these services at SM&S, of which three provide services to the
regulated business and two provide services to the non-regulated business units. They report to the
Controller & Chief Accounting Officer.
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A.9.2 Results of Accounting Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Accounting Services with the median of our panel.
SM&S Accounting Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$4,780 $2,418
The chart below shows the normalized Accounting Services costs compared to our panel of utilities. As can
be seen, the total SM&S cost for this service is well above the median.

A.9.3 PA Comment on These Results
Accounting Services is required to maintain general and detailed ledgers as well as develop and provide
both financial statements and regulatory reports for a large number of operating companies. On average,
SUEZ NA has a larger number of affiliates requiring these services than the peer panel member companies.
Given that the time and effort to perform these services is not proportionate to the size of the company,
we expect on a normalized basis that SM&S Accounting Services will be generally higher than the
normalized results for the individual peer panel members.
A.9.4 Market information for Accounting Services
Currently Outsourced Services
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In 2019, the amount outsourced totaled $1.1M, or 25.2%, of total Accounting spend for the year. The
majority of these outside services costs relate to external audit fees. In addition, Accounting Services
augmented its staff to manage vacancies, peak workloads, etc.
Appropriateness for Third Party Provisioning
Accounting Services in the utility industry require specific knowledge of regulatory accounting as well as
the various technologies used in the industry. In addition, detailed knowledge of departmental budgets
and IT systems would make outsourcing unadvisable. For these reasons and those discussed previously,
in our opinion, it would not be prudent to source Accounting Services from third parties.
Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management. Based on
Company provided data, the staff augmentation fees for Accounting Services are lower on average than the
Company’s internal billing rate for similar services.

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Corporate Tax Services
A.10.1 Description of Corporate Tax Services
Corporate Tax Services includes the following:
• Develop long-range tax planning to optimize tax positions for the Company; this also involves
analysis of laws and regulations as they impact the company’s interest;
• File federal, state and local tax returns and defends all related income tax audits as well as all
applicable sales, use, and gross receipts tax returns; and,
• Ensure proper accounting in all tax accounts.
Corporate Tax related services above, are performed by the Director of Tax Compliance, which is also a
part of the Chief Financial Officer’s organization. There are seven employees that provide these services
at SM&S, of which four provide services to the regulated business and three provide services to all
business units.
A.10.2 Results of Corporate Tax Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Corporate Tax Services with the median of our panel.
SM&S Corporate Tax Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$2,486 $402
The chart below shows the normalized Corporate Tax Services costs compared to our panel of utilities.
As can be seen, the total SM&S cost for this service is significantly above the panel median.
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A.10.3 PA Comment on These Results
In 2019, SUEZ was still incurring extraordinary costs needed to comply with the Tax Cuts and Jobs Act of
2017. The peer panel median, which was based on 2016 costs inflated to 2019, would not have included
any costs associated with compliance with the 2017 TC&JA. Based on our experience, all utilities incurred
significant incremental costs associated with complying with the Act. In our opinion, these compliance
activities contribute significantly to the difference noted above. And similar to Accounting Services, the
number of affiliates for whom these services are provided drives resource requirements compared to peer
panel member companies with a small number – in some cases a single – of operating affiliates.
A.10.4 Market Information for Corporate Tax Services
Currently Outsourced Services
SM&S Corporate Tax Services currently outsources a significant amount of work. In 2019, the amount
outsourced totaled $1.1M, or 43.6%, of total corporate tax spend for the year.
IRS tax risk and controversy consulting services provided by Deloitte make up approximately $300k of the
$1.1M total services outsourced. Other services outsourced include the review of federal and state income
tax returns, and software implementation.
Appropriateness for Third Party Provisioning
Compliance with IRS, state and local tax regulations is complex. It is common for utilities to use
professional services providers to assist with the preparation of, or the review of, tax returns prior to filing.
Available Market Information
Comparable data was not analyzed for Corporate Tax outsourced services, as these services are usually
for specific expertise and skills which are not provided internally.
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Treasury Services
A.11.1 Description of Treasury Services
Treasury Services include:
• Short term borrowing and investing, including activities such as, rating agency activity or issuance
fees, money, cash pooling, EFT originations, tax payments, FX processing, intercompany loans
administration of transactions and daily settlement, determining daily cash position, and costs for
issuing and paying agents;
• Bank Administration and KYC updates
• Assist with financial statement disclosures as they pertain to long term debt, short term facilities and
covenant compliance requirements.
• Daily cash account reconciliations, internal treasury workstation administration; bank or third-party
fees, such as service charges, positive pay fees, and security related fees for both utility and non-utility
account; all bank credit facility costs (e.g. bank lines, credit lines, revolvers) including any upfront fees
and on-going fees;
• Develop a long-range financing and dividend strategy consistent with the targeted credit profile,
setting balance sheet targets, developing and recommending hurdle rates for the company’s business
lines; and,
• Rating agency relations includes managing communications with the agencies and includes annual
rating maintenance fees.
There are four SM&S employees who provide these and other Treasury Services to all business units, no
employees dedicated to the regulated or non-regulated business. These employees report to the Vice
President, Treasurer.
A.11.2 Results of Treasury Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Treasury Services with the median of our panel.
SM&S Treasury Costs ($000) Peer Panel Normalized Median Cost ($000)
$1,964 $980
The chart below shows the normalized Treasury Services costs compared to our panel of utilities.
As can be seen, the total SM&S cost for this service is above the panel median.
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A.11.3 PA Comment on These Results
The variance to the peer group median is likely due to economies of scale and the impact of normalizing
to a Company the size of SUEZ NA together with the added complexity of the SUEZ NA corporate structure.
A.11.4 Market Information for Treasury Services
Currently Outsourced Services
Virtually no Treasury Services are outsourced.
Appropriateness for Third Party Provisioning
Treasury Services is an integral part of SWPA’s financial processes. Many of the functions performed have
a direct impact on SWPA ratepayers by developing financing plans that reduce revenue requirements while
obtaining capital required for expenditures that effect service and reliability. This requires not only keen
finance skills but also solid knowledge of the financing markets available to the utility industry. For these
reasons and those discussed previously, in our opinion, it would not be prudent to outsource Treasury
Services.
Available Market Information
Not applicable

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Procurement Services
A.12.1 Description of Procurement Services
4.14.5 Description of Procurement Services
• Procurement Services includes procurement planning and scheduling:
o RFP, RFQ, RFI creation
o Management of the bidding process which consists of bidder selection, invitation, bid package
preparation and distribution, bid evaluations, vendor selection, and contract award
o Contract and task order creation and processing
o Supplier screening and vetting
o Issue of Purchase Orders and supplier follow-up
o Administration of PCard program
o Administration of fleet and travel services
o Administration of various telecommunications programs, specifically mobile/wireless
services.
o Certificate of Insurance maintenance for contracted suppliers
o Invoice preparation and processing for certain programs such as copiers.

There are fourteen employees providing Procurement Services at SM&S, of which seven provide services
to the regulated business, two provide services to the non-regulated business units, and five provide
services to all business units. Procurement Services are the responsibility of the: Sr. Director Utility
Procurement, VP Indirect Procurement, and Sr. Director SM&S Procurement.

A.1.1 Results of Procurement Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Procurement Services with the median of our panel.
SM&S Procurement Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$2,529 $3,861
The chart below shows the Procurement Services costs compared to our normalized panel of utilities. As
can be seen, the total SM&S cost for this service are below the median of the peer group.
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A.1.2 PA Comment on These Results
None as SUEZ NA’s procurement costs are significantly below the peer panel median.
A.1.3 Market Information for Procurement Services
Currently Outsourced Services
In 2019, the amount of SM&S Procurement Services outsourced totaled $110k, or 7.1%, of total
Procurement spend for the year. A large amount of these are related to temporary employees and legal
fees. Legal fees are related to a lawsuit from a former department employee and legal support for a fleet
leasing contract.
Appropriateness for Third Party Provisioning
Procurement Services requires specific and detailed knowledge of the water utility business and
contributes the most value to the business when it is tightly integrated with utility operations. PA does
not consider this service as a candidate for third party sourcing.
Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management. Based on
Company provided data, the staff augmentation fees for Procurement Services are lower on average than the
Company’s internal billing rate for similar services.
Comparable data was not analyzed for other Procurement outsourced services, as these services are
usually for specific expertise and skills which are not provided internally.
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Legal Services
A.2.1 Description of Legal Services
The Legal Department comprises a multidisciplinary team of legal, insurance and compliance professionals
who support the water, wastewater and recycling operations of SUEZ NA.
Legal provides the following services:
• Legal counsel and representation, litigation and legal risk management, contract drafting and
review, compliance oversight and other services and counsel to all divisions and corporate
departments within the Company.
o As part of the above services, Legal provides counsel in decision-making to the Chief
Executive Officer, the Executive Committee (ExCom), Division Presidents, Directors, Vice
Presidents and other individuals acting in their capacity as employees of SUEZ NA.
o Legal also provides advice on the legal implications of policy and other decisions under
applicable laws, rules, regulations and corporate policies, in addition to representing the
Company in litigation matters, administrative and regulatory hearings, and significant
business transactions.
Insurance provides the following services:
• Evaluation of the Company’s corporate insurance and surety bond programs, which include :
o negotiating and placing coverage;
o providing data for off-balance-sheet reporting to SUEZ Group;
o selecting appropriate insurance limits, deductibles and surety capacity;
o selecting and managing brokers who provide insurance and surety support services, and
negotiating their compensation;
o reviewing, evaluating and providing recommendations for proposed business contracts
in order to identify and mitigate potential liability;
o providing insurance pricing for existing contracts and backup support for rate cases;
o establishing and managing the annual insurance and claims deductible budget and
expense;
o managing the annual actuarial review of reserve analysis of deductible losses;
o managing the claims handling process for workers’ compensation, auto liability and
general liability; and
o reporting and managing claims for all lines of coverage except auto and general liability.
Enterprise Risk Management and Corporate Compliance provides the following services:
• Responsible for implementing and managing the ERM program for the North America Business
Units. The team ensures all departments, operations and processes work together in a consistent
and integrated manner, with the overall objective of mitigating risks to the extent reasonably
practicable.
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• Responsible for coordinating and implementing the Company’s compliance improvement
initiative as part of the overall compliance strategy. The team is charged with helping to build an
effective compliance program for North America, which includes:
o promoting compliance awareness through training and communication;
o developing Company policies and procedures;
o liaising with compliance professionals in other departments (e.g., EH&S, IT, Finance) to
identify and close compliance gaps;
o engaging senior and middle management to lead by example;
o emphasizing confidential reporting by employees; and
o creating incentives to reward lawful conduct by employees.
Legal Services are the responsibility of the General Counsel of SUEZ NA. There are nineteen employees
that provide these services at SM&S, of which three provide services to the regulated business, four
provide services to the non-regulated business units, and twelve provide services to all business units.
Details of each legal department hierarchy is provided below.
Within Legal, there are four teams of attorneys and non-legal staff that support (i) the Utility Division, (ii)
the Environmental Services Division (including Business Development), (iii) Advanced Solutions, and (iv)
Litigation. Each team is led by a Senior Corporate Attorney who has hierarchical (direct line) reporting to
the General Counsel of SUEZ NA. The Senior Corporate Attorney for each of the Utility Division,
Environmental Services and Advanced Solutions has functional (dotted line) reporting to their respective
Division President.
The Insurance team is led by an Insurance Director and includes a Corporate Insurance Specialist and a
Claims Specialist. The Insurance Director has hierarchical (direct line) reporting to the General Counsel of
SUEZ NA and functional (dotted line) reporting to the SUEZ Group Director of Insurance.
The ERM and Corporate Compliance team is led by a Senior Director and includes a Corporate Compliance
Manager. The Senior Director has hierarchical (direct line) reporting to the General Counsel of SUEZ NA
and functional (dotted line) reporting to the SUEZ Group Director of Risks and Investments.
A.2.2 Results of Legal Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Legal Services with the median of our panel.
SM&S Legal Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$5,861 $5,488

The chart below shows the Legal Services costs compared to our panel of utilities described in. As can be
seen, the total SM&S cost for this service are slightly above the median cost in the peer panel.
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A.2.3 PA Comment on These Results
None
A.2.4 Market Information for Legal Services
In 2019, the amount of Legal services outsourced totaled $297k, or 4.0%, of total SM&S Legal Services
spend for the year. Based on our knowledge of industry practices, this percentage is very low. However,
we learned that most legal services provided by outside law firms are direct charged to the entity
requesting those services and not to the SM&S Legal Services department. When these outsourced legal
services are considered, we believe the Company’s use of outsourced legal services is in line with common
industry practices.
Based on discussions with the SVP and General Counsel of SUEZ NA, following her arrival a significant effort
was made to obtain efficient, cost effective and high-quality legal representation through mutual
commitment. This was established by launching an RFP for Legal Services in October 2017, which resulted
in a roster of preferred law firms that offered substantial discounts, effectively keeping the rates
unchanged for at least two years. A review of the attorney level at outside firms performing the work also
helped keep costs down (i.e., having senior associates instead of law firm partners performing the work,
where practicable). The majority of the Company’s legal work is now performed by its team of in-house
attorneys and paralegals, with selected firms being used for Regulatory matters, Real Estate and Title,
Litigation, Intellectual Property, and special one-off legal matters that may arise.
For example, there is primarily one law firm, Cozen O'Connor P.C., that is used for most legal matters for
SWPA. This outside counsel firm is used mainly for rates and regulatory matters given their state and local
expertise and institutional knowledge of the Company. From time to time, another law firm may be
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brought in if specific local knowledge (i.e., town or village etc.) is needed. Legal uses a similar approach for
outside counsel firms in each state in which the Company conducts business.
The fees associated with outside counsel are directly billed to SWPA for all matters excluding litigation and
contract disputes. These costs are billed to SM&S and allocated to the business units.
As a result of the changes in how outside counsel is selected and managed, the historical costs of
approximately $5.0M - $5.5M that was direct charged to SUEZ NA business units as well as SM&S are now
trending downward. The amount direct charged to SWPA in 2019 was $470k primarily related to real
estate easement, and acquisitions.
Appropriateness for Third Party Provisioning
There are certain Legal Services that can be prudently outsourced, at least in part, given that the
governance remains at SM&S. As discussed above, the Company’s use of outside law firms to provide
certain legal services is reasonable and consistent with common industry practices and the oversight of
the services provided by SM&S Legal Services is appropriate.
Available Market Information
The legal work routinely outsourced is usually of a complicated, specialized nature where the Company is
seeking to obtain specialized knowledge and expertise and/or lawyers with a license to practice in certain
jurisdictions for litigation and corporate matters. Senior-level legal resources are typically selected for
these assignments based on the possession of these specialized, unique skills and qualifications.
Based on the comparable position of SUEZ NA to the peer panel median and the outsourcing practices as
described, PA did not review market information for Legal Services.

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Information Technology
A.3.1 Description of Information Technology Services
Information and Operations Technology Services include:
• Development of technology vision, strategy, and a roadmap, and lead the IT team and its business
partners in effective execution.
• Ensure, on an ongoing basis, that current and planned technical architecture, investments and
solutions are aligned with company business objectives.
• Prepare and monitor IT operational budgets that meet prevailing objectives and constraints.
• Develop and execute an analytics program that will allow company business leaders to make data-
based decisions.
• Direct the design, planning, implementation, and maintenance of the computing infrastructure
that supports the company’s operations and business applications.
• Establish metrics for managing IT effectiveness and for measuring the impact of IT on the business.
• Establish appropriate service levels and the processes to ensure that KPIs are met.
• Maintain oversight of all IT projects, ensuring that commitments are properly planned, staffed,
monitored and reported.
• Establish a comprehensive enterprise information security program to ensure the integrity,
confidentiality and availability of relevant data
• Operate and monitor data center infrastructure and applications, backup & restore services,
change management administration, batch job management, hardware and software installation
and decommissioning;
• Support, problem resolution, and the application of minor enhancements, upgrades and patches
to applications;
• Develop, support and manage methodologies and measurements for effective delivery of
business solutions; and,
• Design, develop, test and implement new information technology and new information
technology standards and tools for computing environments.
• Provide support center user interface as well as Tier 1 and Tier 2 support for End User support
requests;
• Install, maintain and resolve service problems for end user computing devices, networks,
business/operational/customer systems;
• Manage the installation, operation, and on-going network security administration including:
identity and access management, user provisioning, access control, monitoring and managing
security systems including firewalls, IDS/IPS, and event management systems, vulnerability
management (patching and antivirus administration), etc.;
• Architecture design, implementation, technical support, problem resolution, application of minor
enhancements, upgrades and patches for operating and financial systems;
• Monitor security events, assists with information gathering for required system audits and
provides project management support for new system implementations, upgrades and
enhancements;
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• Implement the cyber security policies and controls development and architecture evaluation of
security solutions and it monitors alignment with best practices, incident response planning, and;
• Manage equipment, service and usage expenses paid to telecom providers for phone, data
circuits, Internet, etc. This includes WAN costs such as fiber backbone or microwave, whether
those WAN costs are external service provider costs or are provided by internal resources.
• Manage and deliver an integrated omni-channel Customer Experience (CX) Strategy
• Define and drive ongoing cycle of improving the Customer Experience across cross functional
teams
• Develop and maintain value-adding relationships with external partners in support of both CX
Strategy as well as Customer Operations to drive program success (including Payment, Billing,
Hosting, Web Development, Journey Mapping, Call Center, etc.)
There are seventy employees that provide these services at SM&S, of which thirty-seven provide services
to the regulated business, two provide services to the non-regulated business units, and thirty-one provide
services to all business units. Information Technology Services (known internally as Business Technology
Services) are the responsibility of the SVP, Chief Information and Digital Officer.
A.3.2 Results of Information Technology Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for IT Services with the median of our panel.
SM&S IT Costs ($000) Peer Panel - IT Normalized Median Cost ($000)
$27,194 $30,450
Note that total IT spend is below the peer panel median.
The chart below shows the normalized IT Services costs compared to our panel of utilities. As can be seen,
the total cost for this service is below the median in the peer panel.
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A.3.3 PA Comment on These Results
None
A.3.4 Market Information for Information Technology
Currently Outsourced Services
Information Technology typically sources a significant number of services to third-party suppliers. Data
provided to PA shows Information Technology spent $13.6M for outside services in 2019. PA adjusted this
amount to re-class outsourced services provided by ADP related to Payroll Services to Human Resource
Services. The remaining portion of IT outsourced service total $12.9M or 46.8% of the 2019 IT spend.
Although the majority of the $13.6M total is related to outside services, included are items related to staff
augmentation which we are not considering as outsourced services for the purposes of this report, and
license & maintenance agreements which make up $3.5M. Management noted Information Technology
outsourced services include outsourced services from other SM&S functions for the benefit of the
Information Technology department, which total approximately $1.2M. For example, payroll services
related to the HRS system is included as part of the Information Technology outsourced services for the
portion of services that benefit the Information Technology department. Also included in the $13.6M total
are chargebacks from the Parent company related to Microsoft Office 365 which total $1.2M, and the
outsourced Payroll service to ADP.
Shown below are some of the large Information Technology outsourced service providers used.

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Outsourced Service Provider Service Providing Cost ($000)
Equinix Data Center Operations $514
CenturyLink & Presidio Networked
Solutions Network Services $1,000
CapGemini Finance Systems Consulting $710
Navisite Operations and Maintenance of the
Peoplesoft Finance System $767
Workforce Logiq Staff Augmentation $1,732
Esri GIS Services $700 - $800
Infor Asset Management System ~$700

Appropriateness for Third Party Provisioning
Many Information Technology services are suitable for sourcing to third parties. In discussions with
management, PA leant SUEZ prefers to keep strategic Information Technology related activities in-house.
For example, SUEZ’s billing and asset management systems were bought as an off-the-shelf product but
configuration is done internally. The helpdesk center operations are also performed internally as the
Company found an internally managed helpdesk center to offer better customer satisfaction results and
more cost efficient then an outsourced alternative.
Services the Information Technology department currently outsources include; power calling and internet
connectivity for the data center operations which are outsourced to Equinix, network services (i.e., WAN)
are outsourced to CenturyLink (wires and local area networks are managed internally), the GIS system is
outsourced to Esri, telecom infrastructure is outsourced to RingCentral, and a small portion of Call Center
telephony & IVR solutions are outsourced to RingCentral and Incontact at the SM&S level (the rest being
expensed at the business unit level).
For Cyber Security, the Company employees an internal team for first responders and risk management, if
an event where to occur, SUEZ secured Global Digital Forensics on retainer.
PA finds the Information Technology services outsourced by SUEZ to be reasonable and of a typical
Information Technology department.
Available Market Information
PA reviewed the hourly rates for staff augmentation services provided by Workforce Management.
Based on Company provided data, the staff augmentation fees for Information Technology Services are
higher on average than the Company’s internal billing rate for similar services.
Comparable data was not analyzed for other Information Technology outsourced services, as these
services are for specific expertise and skills which are not provided internally.
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Human Resource Services
Human Resource Services includes Payroll Services.
A.4.1 Description of Human Resource Services
Human Resource Services
• The recruitment, screening, and selection of internal and external candidates;
• Establishing relocation programs and management of employee relocations, including all
administration and execution costs of the relocation program;
• Design and administer compensation processes including job evaluations, annual salary planning,
incentive programs, executive compensation, deferred compensation, long term incentive
programs;
• Design, management and implementation of health, prescription, life insurance, disability,
pension and retirement, reimbursement accounts, employee assistance programs, and other
benefits for all employees;
• Manage strategy, negotiations, and contract interpretation for collective bargaining agreements
with labor unions. This includes arbitration resolution, mutual gains bargaining, local
management support on grievances, discipline, adherence to the contract and training;
• Identification, development, and delivery of training programs to enhance the skills and
capabilities of the workforce;
• Provide support on Human Resources technology and processes, technology strategy and
solutions, portfolio management, corporate and ad hoc reporting, data analysis, data integrity
and oversight, and system testing; and, process and release management;
• Succession planning, performance management, career development, mentoring, executive
coaching, career planning & development, and employee/organizational assessments;
• Management and administration of all short and long term disability programs and FMLA,
whether done internally or by a third party; disability insurance premiums, if any, and the cost of
claims for self-insured programs and insured programs with a deductible; medical services
required by the Company for disability cases, such as second opinions, consultations, etc.;
disability case management and return to work programs; investigations of short term disability
claims; legal services, whether internal or external, related to disability cases;
• Develop and implement culture and engagement strategy and initiatives, including employee
communications and feedback, wellbeing activities, organization assessments, etc.
There are twenty-three employees that provide these services at SM&S, of which two provide services to
the regulated business, four provide services to the non-regulated business units, and seventeen provide
services to all business units. Human Resource Services responsibility is with the Vice President, Human
Resources organization.
Payroll Services
• Payroll Services have been partially outsourced to ADP. With the assistance of the SM&S Payroll
department, these Services include: the issuance of employee payroll checks as well as processing
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employee withholding information, tax withholding deposits, quarterly payroll tax returns, payroll
calculations, annual W-2s and government reporting; processes pay adjustments; special pays,
including stock related payments, short term disability, workers compensation and garnishments;
preparing payroll tax filings; printing, stuffing, and distributing pay checks and electronic deposit
statements;
• SM&S Payroll provides support for employee calls concerning time and attendance issues, as well
as pay & recognition related issues (i.e., paycheck, final paycheck, sick time, vacation time, floating
holidays, etc.); and, M&S payroll calculates the vacation carryover from one year to another as
well as other paid time off categories, handle certified prevailing wage requirements, audits, etc.
• SM&S Payroll also provides assistance to the timekeeping system and its users to troubleshoot
time entry issues, determine how business processes impact time entry rules, maintain time entry
tables such as job substitution and prevailing wage, answer time entry questions, create reports
on time entry data, training to employees on time entry and issue communications about time
entry/work rules and deadlines.
There are six SM&S employees who provide Payroll Services to all business units, no employees dedicated
to the regulated or non-regulated business. Payroll Services responsibility is with the Senior VP of HR.
There are no embedded SWPA employees providing Payroll Services.
A.4.2 Results of Human Resource Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Human Resources Services with the median of our panel.
SM&S HR Costs ($000) Peer Panel HR Normalized Median Cost ($000)
$6,600 $5,313
The chart below shows the total Human Resource Services costs compared to our panel of utilities. As
can be seen, the total SM&S costs for this service are above the median.

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A.4.3 PA Comment on These Results
SUEZ NA HR Services costs are reasonable compared to the median of the peer panel.
A.4.4 Market Information for Human Resource Services
Currently Outsourced Services
Payroll Services have been outsourced to ADP. The total amount of Payroll services outsourced in 2019
was $726k, or 79.1%, of total Payroll spend for the year.
The remaining amount of outsourced Human Resource services total $771k. The majority of these costs
are related to legal advice and services for employment and benefits topics (i.e., Health and Benefits,
Actuary fees, retirement, 401(k), etc.), background checks for pending new hires, compliance subscription
for DOT program, and staff augmentation.
Appropriateness for Third Party Provisioning
As discussed earlier, certain services can be prudently outsourced, at least in part, given that the
governance and strategic aspects of the service are maintained in-house. HR services that are typically
considered for outsourcing include: relocation services;·temporary staffing managed services program; HR
services center; Medicare coordinator; health and welfare annual enrollment support; retiree drug
subsidy reconciliation support; wellness program administration; financial basics training program; HR
survey services; HR coaching; health and welfare plan management & active and retiree annual
enrollment.
Payroll services, which has been aligned with Human Resources for the purposes of this report, are
typically considered for outsourcing as well.
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Available Market Information
NA
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Corporate Communication Services
A.5.1 Description of Corporate Communication Services
Corporate Communication Services include:
• Media Relations: Research and develop media response, positioning, and strategy to respond to media
inquiries or place stories in the media. Develop press releases, arrange interviews, and maintain 24/7
media relations availability. Act as company spokesperson. Also includes communications resources
with respect to corporate responsibility, etc.
• Corporate Awareness Communications or Advertising: General corporate awareness and brand image
purposes, including "issue advertising". Spend includes agency/vendor fees to create and execute
advertising.
• External Informational, Safety, and Educational Communications: Communications or advertising
spend that provides information and educational messaging on topics such as: billing and payment
options, such as e-billing, budget billing, and direct debit; rate options; low-income programs,
consumer protection and privacy rights notices; general water efficiency information; public safety,
including "call before you dig" programs; school education programs; and special educational
programs such as environmental programs.
• Product/Service Promotion: Communications or advertising spend that promotes products or/or
services from which the utility will benefit.
• Internal and Intranet Communications: Internal Communications included Company communications
between employees or departments across all levels, or divisions, of an organization. Intranet
Communications includes posting of content to the internal intranet, managing intranet user
experience, interfacing with IT for intranet administration, measurement and analysis of intranet
traffic and other data.
• External Publication and Communications: Communication targeted for non-employee audiences
(public, media).
• Annual Report: Design, production, printing and distribution of the Annual report, including postage.
• Internet Website Content Development and Maintenance: Development and/or curation of content
for all externally facing company websites.
• Social Media Communications: Management and administration of established corporate social media
accounts, such as Facebook, Twitter, Instagram, and others, and the delivery of content through those
social media channels.
There are six employees that provide these services at SM&S, of which two provide services to the
regulated business, one provides services to the non-regulated business units, and three provide services
to all business units. Corporate Communication Services are the responsibility of the Senior Vice President
of Communications.
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A.5.2 Results of Corporate Communication Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Corporate Communications Services with the median of our panel.
SM&S Corporate Communications Costs ($000) Peer Panel Normalized Median Cost ($000)
$6,838 $4,640
The chart below shows the total Corporate Communications Services costs compared to our panel of
utilities. As can be seen, the total SM&S costs for this service are above the median.

A.5.3 PA Comment on These Results
Corporate Communications costs is excess of the peer panel are largely driven by approx. $2M in spend
in 2019 for outside services required by two local utilities for conservation programs and lead in water
pipes issues. Conservation program spend is expected to continue.
A.5.4 Third Party Sourcing
Currently Outsourced Services
The SM&S Corporate Communications outsources a significant portion of its work. In 2019, $0.7M, or
28%, of its total cost of $2.5M was paid to third party providers. In addition, over $2.0M is additional
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outside services costs were incurred by local utilities for conservation programs and lead in water pipes
issues.
Appropriateness for Third Party Provisioning
Many Corporate Communication Services are suitable for sourcing to third parties. These include;
conducting surveys, creating and executing advertising for corporate awareness and brand image
purposes, information and educational messaging services such as billing and payment options, and the
development and maintenance of company websites. SUEZ appears to appropriate use outside resources
as needed for expertise and to supplement staff for temporary needs.
Available Market Information
NA

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Regulatory Business Services
A.6.1 Description of Regulatory Business Services
The Regulatory Business Services provided by SM&S include:
• Translation of financial data into State regulated revenue requirements, including the preparation
of supporting work papers for rate cases and other regulatory filings;
• Internal and external costs for cost of capital and cost of equity testimony; calculations of formula
rates and filings associated with these calculations;
• Oversight and policy guidance on regulatory proceedings;
• Management and maintenance of routine State economic regulatory relationships and contacts;
Management and maintenance of routine regulatory contacts, with stakeholders;
• Monitors issues and advocates positions in federal regulatory proceedings as they pertain to the
Company's businesses;
• Rate design and tariff administration activities. This also includes tariff interpretation activities,
marginal cost analyses, and the pricing and tariff-related aspects of special contracts requiring
regulatory approval;
• Participation in technical conferences, monitoring regulatory activities, and discussing issues with
PUC staff; and,
• Prepare required State and Federal regulatory reporting for initiatives including service quality
indicator quarterly reports.
There are nine employees providing SM&S Regulatory Business Services including the Vice President,
Regulatory Business. Regulatory Business is under the direction of the Vice President – Rates & Regulatory
Affairs.
A.6.2 Results of Regulatory Business Services Benchmarking
In order to benchmark SM&S costs on a comparable basis, we normalized each of the peer panel
companies’ costs for the same service. The purpose of the normalization is to bring all utilities in the panel
to the same size as SUEZ Water. The table below shows the actual SM&S Regulated and Shared Service
costs for Regulatory Business Services with the median of our panel.
SM&S Regulatory Business Services Costs ($000) Peer Panel Normalized Median Cost ($000)
$2,354 $1,929

The chart below shows the total Regulatory Business Services costs compared to our panel of utilities. As
can be seen, the total SM&S costs for this service are above the median.
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A.6.3 PA Comment on These Results
The cost of Regulatory Business function at any utility is typically related to the regulatory activity in the
jurisdictions it serves. SM&S Regulatory Business supports approximately a dozen regulated affiliates in
several States. These regulated affiliates are typically significantly smaller than the average size of a peer
panel regulated affiliate. Consequently, when normalized to the size of SUEZ NA, peer panel results reflect
significant economies of scale, beyond those available to SUEZ Water.
The use of a consolidated regulatory staff provides SUEZ with opportunities to leverage the capacity of
regulatory staff to manage resources and ensure the consistency of regulatory policies, approaches and
practices.
It is common to use outside experts for rate cases (e.g., depreciation studies, COSS, ROE/Cap Structure
analysis, etc.). These costs do not go through SM&S rather they are treated as deferred costs in the
respective regulated utility for recovery in the specific case.
A.6.4 Market Information for Regulatory Business Services
Currently Outsourced Services
The Regulatory Business at SM&S regularly engages third parties for expert analysis and testimony during
regulatory proceedings. This is a common practice for specialized services such as depreciation studies,
cost of service studies, and cost of equity studies. In 2019, the amount outsourced totaled $115k, or 5%,
of total Regulatory Services spend for the year.
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Appropriateness for Third Party Provisioning
Regulatory Management Services are an integral part of SM&S’s financial and regulatory compliance
processes. Many of the functions performed have a direct impact on SWPA ratepayers by developing
plans that support the revenue requirements to obtain capital required for expenditures that effect
service and reliability. This requires not only keen finance and regulatory skills but also solid knowledge
of regulatory compliance requirements and how they have evolved over time. For this reason, in our
opinion, it would not be prudent to outsource Regulatory Management Services to a third party.
However, due to the need for expert analysis and testimony during regulatory proceedings, it is common
to use consultants on an as needed basis, which is the Company’s practice as well. This is especially
reasonable as these services are only required in connection with the periodic filing of general rate cases.
Available Market Information
PA did not investigate market information for Regulatory Services.

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SUZ-W-20-02 IPUC DR 101 Attachment 3
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SUZ-W-20-02 IPUC DR 102 Page 1 of 5
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: M. Zerhouni

REQUEST NO. 102:
Please provide the amounts of the M&S Shared Services by department allocated to SUEZ Water Idaho for the last five
years.
RESPONSE NO. 102:
M&S Shared Services are charged to SUEZ Water Idaho Inc. (“SWID”) from the departments in the Corporate M&S level
and the Regulated Segment M&S level. A summary of the amounts of M&S Shared Services charges by department
allocated to SWID for the last five years is included below.
Dept
Number Dept Name 2016 2017 2018 2019 Jan -Nov 2020 Grand Total
Corporate
M&S $4,343,820 $3,530,902 $3,489,214 $1,224,366 $1,001,547 $13,589,849
425 BTS - Operate 569,103 836,604 834,716 473,828 416,566 3,130,818
500 General Accounting 367,305 371,475 293,232 - - 1,032,012
427 IT Depreciation 190,819 212,646 276,798 147,914 122,457 950,633
415 Human Resources 231,921 201,246 200,959 136,223 122,980 893,330
410 Facility Mgt 313,194 258,491 248,622 46,676 26,219 893,202
SUZ-W-20-02 IPUC DR 102 Page 2 of 5
Dept
Number Dept Name 2016 2017 2018 2019 Jan -Nov 2020 Grand Total
405 Communications 145,440 110,265 92,755 - - 348,460
400 General 111,764 104,463 85,782 - - 302,009
210 Health & Safety 76,136 76,119 37,129 38,827 31,262 259,473
SUZ-W-20-02 IPUC DR 102 Page 3 of 5
Dept
Number Dept Name 2016 2017 2018 2019 Jan -Nov 2020 Grand Total
416 Services 20,788 14,770 12,693 16,533 (130) 64,654
443 Indirect - - 12,189 24,078 20,041 56,309
205 Management 21,903 7,411 6,700 581 448 37,042
411 Improvement 10,923 12,375 18,317 (8,043) (6,686) 26,887
4,402,435,43
6,455,460,58
0,800,950) 1,311 1,519 3,957 1,530 337 8,654
Regulated
Segment
M&S $698,111 $1,120,010 $1,154,658 $2,590,294 $2,198,057 $7,761,130
455 Admin 135,416 374,806 355,746 155,775 138,403 1,160,145
SUZ-W-20-02 IPUC DR 102 Page 4 of 5
Dept
Number Dept Name 2016 2017 2018 2019 Jan -Nov 2020 Grand Total
460 Management 76,253 98,975 159,649 269 43 335,189
210 Health & Safety 43,407 27,359 16,600 34,116 40,284 161,766
405 Communications (2) 19,840 21,822 38,431 41,334 121,424
SUZ-W-20-02 IPUC DR 102 Page 5 of 5
Dept
Number Dept Name 2016 2017 2018 2019 Jan -Nov 2020 Grand Total
205 Management 52 115 - 8,152 4,430 12,749
9,304,400,40
2,418,435,43
6,443) (1,482) (703) 2,019 133 103 70
Grand Total $5,041,931 $4,650,912 $4,643,872 $3,814,660 $3,199,604 $21,350,979

SWID
General
Ledger
Account #
90850923
$5,041,931 $4,650,912 $4,643,872 $3,814,660 $3,199,604 $21,350,979

SUZ-W-20-02
IPUC DR 104 Page 1 of 4
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J.Cagle

REQUEST NO. 104:
Please provide additional description of the M&S Shared Services BTS department
#424, 425 and 426. Include in your response the work they perform and invoices,
plus all relevant information directly associated with SUEZ Water Idaho.
RESPONSE NO. 104: SUEZ’s Business Technology Services (BTS) has an overarching motto to “Define,
Deliver and Operate”. This motto conveys that their committed to all aspects of each
component of the various types of technology – not just when it is selected and installed
but throughout the technology’s lifecycle. They hold themselves to the highest standard
of design, service delivery, information security and project management. Whether it is
a single mobile phone, one of the thousands of internet routers, or a new technology
project it is all-important to keep SUEZ NA’s colleagues productive in the operations and
competitive in today’s information driven marketplace. In strategic partnership with SUEZ
NA leadership, they strive to contribute to SUEZ NA’s customer proposition in tomorrow’s
marketplace as well.

The BTS team is comprised of dedicated professionals that support all aspects of
information technology – architecture, infrastructure, applications, information security,
service desk, project management and the customers’ digital experience. BTS serves all
sites in North America and all functions. With the business teams’ significant reliance on
technology comes an equally significant responsibility to which the BTS team works
tirelessly to fulfill.

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IPUC DR 104 Page 2 of 4
Business Technology Services is divided into three departments centered on their motto
of (Define, Deliver, and Operate) and each performs the functions outlined below:

BTS Department 424-Define
1. Strategy and Architecture
-Supporting the business in design and strategy for technology portfolios to
support end-to end value streams.
-Enterprise architecture with a particular focus on integration across disparate and
cloud based applications.
-Modern data architecture aimed at aggregating, exploiting and exposing
increasing volume of data to the business.
-Solution architecture, advice and design, supporting business technology
projects
-Data strategy and architecture.

2. IT Security and Risk
-Develop the controls and tools to build a defense in depth security ecosystem.
-Develop, promote and monitor compliance with IT risk and security policies,
strategy and control framework.
-Drive security awareness and risk-optimized culture.
-Integrate and consistently ensure alignment of IT risk posture with enterprise risk
management frameworks.
-Progressively deploy new security services with operate teams and 3rd parties to
reduce vulnerabilities and improve responsiveness to events.
-Develop, deploy and monitor operational security services and controls for
SCADA systems.

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IPUC DR 104 Page 3 of 4
BTS Department 425-Operate
1. Customer Experience
-Grow and evangelize digital skillsets and solutions as the business evolves to
build new digital business models.
-Partner with the business to establish integrated, omni-channel customer
experiences.
-Develop personalized, tailored customer interactions via digital channels.
-Lead digital and customer experience strategy and project pipeline planning
-Advocate and support adoption of digital services across business units.
-Develop and support digital software (HTMLS and mobile/table solutions, control
management, APIs etc.)
-Champion human-centered design thinking.

2. HR, Finance & Asset Applications
-Support critical business applications across business portfolios including
corporate and operational technologies.
-Build and deploy both self-service and facilitated data rich reporting and analytics
tools to the business.
-Identify and manage technology support for end-to-end business value streams.
-Adopt product management mindsets and agile methods to enable continuous
delivery.
Integrate and manage SaaS application services into portfolios.
-Drive and support the fulfilment of requests, incidents and problems
-Collaborate with deliver teams to facilitate transition to services into production.
-Plan and track IT financial management.

3. Infrastructure and Operations
-Drive an interconnected network environment that creates a seamless workplace
experience (e.g. mobile, laptop, BYO etc.)
-Provide a customer centric & responsive IT service and request capability.

SUZ-W-20-02
IPUC DR 104 Page 4 of 4
-Adopt modern infrastructure architectures (e.g. pure and hybrid could, software-
defined networks) incorporating third party providers.
-Provide remote and field services engineering support to the business across
major operating regions.

BTS Department 426-Deliver
1. Demand, Project & Change Management
-Ideation and new concept development to promote innovation and adoption of
emerging tech with business partners.
-Business relationship management including integrated demand planning and
shaping.
-Drive the end-to-end delivery of strategic change initiatives to planned cost,
benefit and quality targets.
-Promote project management methodologies including right-fit agile delivery
practices.
-Drive delivery patterns to ensure right-sized governance and engagement with
the business.
-Facilitate portfolio planning & governance, business case process & forums
-Lead change efforts through communication, training and coaching that
empowers change leadership.

Please see the attachment to this response for a summary of BTS costs at invoice level
for the 12 months ended June 30, 2020. This does not include reclassification journal
entries for the period to account for costs initially miscoded and reclassed to the
appropriate general ledger accounts and journal accruals. The total costs for the
departments for the 12 months ended June 30, 2020 is $12,629,683, which is allocated
to SWID based upon the Company’s cost allocation manual provided as attachment 1 to
the response to 101.

CASE NO. SUZ-W-20-02

Response No. 104 Attachment

Excel Spreadsheet Provided Separately
in Native Format
SUZ-W-20-02 IPUC DR 105
Page 1 of 2
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: M. Zerhouni

REQUEST NO. 105:
Please provide a description of the work the M&S Shared Services, Legal, directly
performed for SUEZ Water Idaho.

RESPONSE NO. 105:
The following is a list of legal services provided by the SUEZ M&S Shared Services to
SUEZ Water Idaho Inc. (“SWID”) as detailed out in the Cost allocation manual. In
addition, please see response to data request No. 108 for a copy of the affiliate
agreement between SUEZ Water Management & Services Inc. and SWID and a copy of
the current cost allocation manual.
1) Handle all matters related to general litigation involving the company.
2) Perform legal services for securities and corporate financial transactions,
financial reporting and disclosures, business organizations, mergers,
acquisitions and business development, corporate governance, risk
management, insurance, executive compensation.
3) Manage legal services for commercial and contract law matters for the
corporation, including real estate matters and land use permits.
4) Serve as board secretary and support corporate governance functions, board of
directors meetings, legal opinion letters, assists audit and compliance functions,
and ensures compliance with corporate registration and regulation.
5) Retain and manage external counsel to provide legal representation in
specialized areas of law and to manage variable level legal work.
6) Legal work supporting the negotiation of water purchase agreements and other
procurement contracts as well as legal work related to franchise renewals, water
rights.
SUZ-W-20-02 IPUC DR 105 Page 2 of 2
7) Provide legal advice and representation with regard to intellectual property
matters.
8) Perform legal services for matters involving environmental law for the
corporation including environmental permitting activities, due diligence, defense
in enforcement actions, compliance advice, representation in environmental
cleanup and environmental litigation costs.
9) Provide legal advice, representation and counseling in matters arising under
federal and state water regulatory laws, regulations and policies as they relate
to the Company’s utility related assets for water and waste water.
10) Provide risk management services including management of the insurance and
surety bond programs.
11) Manage and administers corporate legal and regulatory compliance programs.

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SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cagle

REQUEST NO. 106:
Please provide a copy of the 2018 and 2019 reports of the M&S Shared Services,
Internal Audit, performed on SUEZ Water Idaho. What were their findings and any
concerns reported? Were changes made based on any findings or concerns?
RESPONSE NO. 106: There was no internal audit review performed on SUEZ M&S shared services cost
allocation to SUEZ Water Idaho in 2018 and 2019.
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SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J.Cagle

REQUEST NO. 107:
Please provide the cost-benefit analysis of the M&S Shared Services provided to
SUEZ Water Idaho in all departments.
RESPONSE NO. 107: Please refer to response to data request No. 101.
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FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: M. Zerhouni

REQUEST NO. 108:
Please provide a copy of the approval from SUEZ Water Idaho management
agreeing to the new 3-factor allocation method used to allocate M&S Shared
Services.

RESPONSE NO. 108:
Please refer to Attachment 1 for a signed copy of the agreement between SUEZ Water
Management & Services Inc. (SWM&S) and SUEZ Water Idaho Inc. approving the
allocation of M&S Shared Services to SUEZ Water Idaho and Attachment 2, the SWM&S
Cost Allocation Manual that explains the 3-factor allocation methodology. Both
documents have already been provided as part of supplemental work papers to the filing
exhibits.
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SUEZ North America, Inc.
&
SUEZ Water Management & Services, Inc.

Cost Allocation Manual

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I N D E X

Table of Contents

Section Subject Page
1 Introduction 3
2 Responsibility for Maintaining the CAM 3
3 Definitions 3
4 General Principles 5
5 SUEZ Organizational Structure 6
6 Description of Services Provided by M&S to SNA Affiliates 6
7 Services Provided by Affiliates Other Than M&S 13
8 Cost Allocation Methodology 14
9 Time Reporting Procedures 16
10 Mid-Year Changes 16
11 Reporting 17
12 Distribution 17
13 Shared Services Assets 17
Appendix A Sample Service Agreement
Appendix B Organization Charts
Appendix C Allocation Factor Calculation

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1. Introduction
SUEZ North America, Inc. (“SNA”), a wholly owned of Suez Inc., a publicly traded
company based in France, is a water utility holding company with operating utility
subsidiaries throughout the United States, which are directly owned by SNA’s
intermediate subsidiary, SUEZ Water, Inc.
SUEZ Water Management and Services, Inc. (M&S or Shared Services Company)
provides administrative, engineering, legal, operations, accounting, finance, human
resources, purchasing, insurance, data processing, customer service, billing, public
relations, planning and ratemaking services, collectively known as "Shared Services" to
the operating subsidiaries of SUEZ Water, Inc., as listed in Appendix B.
M&S also provides Shared Services to SUEZ Water Environmental Services, Inc. (SUEZ
Environmental), which provides non-regulated water distribution services to several
municipalities throughout the United States and limited services to SUEZ Treatment
Solutions Inc. and Utility Service Group Inc.
M&S is a wholly owned subsidiary of SUEZ Water, Inc., which is a wholly owned
subsidiary of SNA.
The provision of shared services from M&S to its regulated affiliates throughout SNA,
are specified in service agreements filed with the appropriate regulatory commissions.
The services provided are listed below.
The purpose of the Cost Allocation Manual (“CAM”) is to prescribe the manner in which
costs will be charged to the regulated and non-regulated affiliates of SNA. The prevailing
premise of these cost allocation guidelines is that allocation methods should not result in
subsidization of the non-regulated services or products by regulated entities unless
specifically authorized by the regulator.
These guidelines serve to lessen the possibility of subsidization in order to protect SUEZ
ratepayers and to help establish and preserve competition in the water supply and related
competitive services markets. The guidelines also provide flexibility to accommodate
exceptions where the outcome is in the best interest of the utility, its ratepayers and
competitors. The burden of proof for any exception from the general rule rests with M&S.
This Cost Allocation Manual addresses the allocation of the costs of services provided
by M&S to its affiliates within SNA.
2. Responsibility for Maintaining the CAM
The overall responsibility for the Company’s cost allocation policies and procedures will
be with the Regulated Segment Vice President & Chief Financial Officer. The day-to-
day responsibility for maintaining the CAM and ensuring that accounting records reflect
the policies and procedures described in the CAM will be that of the M&S Corporate
Controller.
3. Definitions
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a. Affiliates - companies that are related to each other due to common ownership or
control.
b. Commission – Appropriate State Regulatory Commission (e.g. New York Public
Service Commission).
c. Cost Allocation Manual (CAM) - an indexed compilation and documentation
of the Company's cost allocation policies and related procedures.
d. Cost Allocations - the methods or ratios used to apportion costs. A cost allocator
can be based on the origin of costs, as in the case of cost drivers; cost-causative
linkage of an indirect nature; or one or more overall factors (also known as
general allocators).
e. Cost Center – a function or service where costs are accumulated.
f. Common Costs - costs associated with services or products that are of joint
benefit among regulated and non-regulated business units.
g. Cost Driver - a measurable event or quantity which influences the level of costs
incurred and which can be directly traced to the origin of the costs themselves.
h. Cross-subsidization – the offering of a competitive product and/or service by a
public utility, or the offering of a product and/or service by an affiliate, which
relies in whole or in part on the utilization of utility employees, equipment or
other assets, and for which full compensation (via cost allocation or direct
payment), as determined by the Commission, has not been provided for the use
of such public utility assets, resulting in the inappropriate transfer of benefits from
the utility ratepayers to the competitive product and/or service or affiliate.
i. Department – a function or service for which costs are accumulated.
j. Direct Costs - costs that can be specifically identified with a particular service or
product.
k. Fully Allocated Costs – the sum of the direct, indirect and other economic costs
of all equipment, vehicles, labor, related fringe benefits and overheads, real estate,
furniture, fixtures, computer hardware and software, and other administrative
resources utilized, and other assets utilized and costs incurred, directly or
indirectly in the providing of services from the utility to an affiliate.
l. Indirect Costs - costs that cannot be identified with a particular service or
product. This includes but is not limited to overhead costs, administrative and
general, and taxes.
m. Non-Regulated – those entities, products and services which are not subject to
regulation by regulatory authorities.
n. Regulated - that which is subject to regulation by relevant regulatory authorities.
o. Shared Services – administrative and support services that do not involve
merchant functions, including by way of example: payroll, taxes, shareholder
services, insurance, financial reporting, financial planning and analysis, corporate
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accounting, corporate security, human resources (compensation, benefits,
employment practices), employee records, regulatory affairs, lobbying, legal, and
pension management.
p. Shared Services Assets – primarily computer hardware and software related,
shared services assets are assets utilized by Shared Services and/or utilized in
common among affiliates.
q. Subsidization - the recovery of costs from one class of customers or business
unit, which are more properly attributable to another.
4. General Principles
The following principles guide the allocation of costs for products or services provided
by M&S to its regulated and non-regulated affiliates.
 To the extent practicable, in consideration of administrative costs, costs should
be collected and classified on a direct basis for each asset, service or product
provided;
 The general method for charging indirect costs should be on a fully allocated,
cost-causative allocation basis;
 All direct and allocated costs between regulated and non-regulated services and
products should be traceable on the books of the applicable regulated utility to
the applicable Uniform System of Accounts to the extent possible;
 Documentation should be made available to the appropriate regulatory authority
upon request regarding transactions between the regulated utility and its affiliates;
 Costs should be classified to services or products which, by their very nature, are
either regulated, non-regulated, or common to both; and,
 The primary cost driver of common costs, or a relevant proxy in the absence of a
primary cost driver, should be identified and used to allocate the cost between
regulated and non-regulated services or products and between regulated entities.
5. SUEZ Organizational Structure
SNA is a holding company that provides water and wastewater services to over 7.5
million people in North America through its subsidiaries. See Appendix C for an
organization chart of the SNA Corporate Structure.
The table below identifies the SNA affiliates including SUEZ Water Management &
Services at December 31, 2015.
SNA Affiliates
Affiliate Description of Business
SUEZ North America (SNA) Holding company for all North America affiliates.
It is wholly owned by SUEZ, S.A.S.
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SUEZ Water, Inc. (SWI)
Holding Company for M&S and the regulated and
non-regulated USA water and wastewater
operations.
SUEZ Water Resources, Inc. (SWR)
Owns and operates regulated water and
wastewater utilities.
Also operates municipal water and waste water
systems through public-private partnerships.
Regulated Water & Wastewater Utilities
 SUEZ Water Arlington Hills Sewer Inc.
 SUEZ Water Bethel Inc.
 SUEZ Water Delaware Inc.
 SUEZ Water Idaho Inc.
 SUEZ Water West Milford Sewer Inc.
 SUEZ Water New Jersey Inc.
 SUEZ Water New Rochelle Inc.
 SUEZ Water New York Inc.
 SUEZ Water Owego Inc.
 SUEZ Water Pennsylvania Inc.
 SUEZ Water Princeton Meadows Inc.
 SUEZ Water Rhode Island Inc.
 SUEZ Water South County Sewer Inc.
 SUEZ Water Toms River Inc.
 SUEZ Water Westchester
SUEZ Water Management & Services,
Inc. (M&S)
M&S provides administrative, engineering, legal,
operations, accounting, finance, human
resources, purchasing, insurance, data
processing, customer service, billing, public
relations, planning and ratemaking services,
collectively known as “Shared Services” to the
operating subsidiaries of SNA.
SUEZ Water Environmental Services, Inc.
Parent company for the SNA non-regulated
subsidiaries:
 Bayonne Water
 Middletown Water
 SUEZ Water Indiana
 SUEZ Water Long Island
 SUEZ Water Mississippi

SUEZ Treatment Solutions Inc. Provides local authorities and industries with
water treatment solutions and services.
SUEZ Utility Services Group
Provides comprehensive condition assessments,
rehabilitation services and sustainable asset
management solutions to help municipal and
industrial water industries manage their water
systems.
6. Description of M&S Products and Services Provided To SNA Affiliates
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SUEZ Water Management & Services, Inc. (M&S) is a wholly owned subsidiary of
SUEZ Water, Inc., which is a wholly owned subsidiary of SUEZ North America, Inc.
(SNA).
M&S provides administrative, engineering, legal, operations, accounting, finance,
human resources, purchasing, insurance, data processing, customer service, billing,
public relations, planning and ratemaking services, collectively known as "Shared
Services" to the subsidiaries of SNA. These services are described below.
Services Provided By M&S

Service Provided Description of Services Provided
Executive Services
This includes executive management and support in the Office of
the CEO, the Office of the COO, and other executive positions not
otherwise described herein.
Financial Planning
Assessing the business environment; identification of key issues;
developing business unit strategies and objectives, and
examination of alternatives; developing multi-year earnings,
margin, cash, O&M, and capital plan; modeling the financial impact
of new capital investments and balance sheet restructuring;
forecasting for regulatory filings; performing analytic support for
external stakeholders, and governing corporate capital
expenditures;
Develop business unit and department financial business plans for
the next year including earnings, margin, cash, O&M and capital
plans;
Perform analysis of results and prepares variance commentary for
earnings, margin, O&M, and Capital within the Company and
business unit;
Prepare and revise forecasts for earnings, margin, cash, O&M, and
Capital within the business units; and,
Review actual information and projects the remainder of the current
year future years. This function performs “what-if” analysis for
various scenarios for business unit decision-making.
Accounting and Tax
Managing the monthly closing process including account
reconciliations, accounting issue resolution, and process
improvement; preparing standard monthly journal entries and
analysis to support accounting;
Managing the accounting for fixed assets including: work order
creation and set-up, analysis and monitoring of capital projects;
creating and managing fixed asset records including asset
addition, retirements, transfers or adjustments and the
preparation of any related journal entries and account
reconciliations; reporting of plant asset information for financial,
audits, regulatory reporting, rate cases or other internal needs;
process associated with the development, analysis, and
accounting for depreciation;
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Service Provided Description of Services Provided
Managing accounting policies, GAAP research, and
implementation of new accounting pronouncements; providing
guidance on accounting issues; communicating any new
accounting guidelines and procedures and their impact to
appropriate organizations organization;
Determining technical accounting details for specific transactions;
performs research, consultations with external audit and guidance
provided to the Company;
Preparing and filing standard regulatory reports, and other
mandated reports as well as with preparing the accounting
information needed to complete the annual report;
Ensure accurate accounting in all accounts.
Perform tax services including audit of assessed property taxes,
payment of property taxes, and the accounting for property taxes.
Develop long-range tax planning to optimize tax positions for the
Company; this also involves analysis of laws and regulations as
they impact the company’s interest;
File federal state and local tax returns and defends all related
income tax audits as well as all applicable sales, use, and gross
receipts tax returns; and,
Ensure proper accounting in all tax accounts.
Treasury
Short term borrowing and investing, including activities such as,
commercial paper issuance and associated activity or issuance
fees, rating agency activity or issuance fees, money, cash pooling,
EFT originations, tax payments, intercompany loans
administration of transactions and daily settlement, determining
daily cash position, and costs for issuing and paying agents;
Daily cash account reconciliations, treasury workstation
administration; bank or third-party fees, such as service charges,
positive pay fees, and security related fees for both utility and non-
utility account; all bank credit facility costs (e.g. bank lines, credit
lines, revolvers) including any upfront fees and on-going fees;
Develop a long-range financing and dividend strategy consistent
with the targeted credit profile, setting balance sheet targets,
developing and recommending hurdle rates for the company’s
business lines; and,
Rating agency relations includes managing communications with
the agencies and includes annual rating maintenance fees and
commercial paper surveillance fees.
Internal Audit
Performs independent, objective assurance and control advisory
services. This includes all audits as well as development of forward
looking audit plans that are independent and reviewed with the
Company's Audit Committee; and,
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Service Provided Description of Services Provided
Manage and administer corporate ethics compliance programs,
including codes of conduct requirements, whistle-blower cases,
ombudsmen services, and associated compliance reporting.
Information Technology
Operate and monitor data center infrastructure and applications,
backup & restore services, change management administration,
batch job management, hardware and software installation and
decommissioning;
Technical support, problem resolution, and the application of minor
enhancements, upgrades and patches to applications;
Develop, support and manage methodologies and measurements
for effective delivery of business solutions; and,
Design, develop, test and implement new information technology
and new information technology standards and tools for computing
environments.
Provide support center user interface as well as Tier 1 and Tier 2
support for End User support requests;
Install, maintain and resolve service problems for end user
computing devices, software, LANs and peripherals;
Manage the installation, operation, and on-going network security
administration including: identity and access management, user
provisioning, access control, monitoring and managing security
systems including firewalls, IDS/IPS, and event management
systems, vulnerability management (patching and antivirus
administration), etc.;
Architecture design, implementation, technical support, problem
resolution, application of minor enhancements, upgrades and
patches for operating and financial systems;
Monitor security events, assists with information gathering for
required system audits and provides project management support
for new system implementations, upgrades and enhancements;
Set standards for procuring network equipment and supporting
configurations;
Implement the cyber security policies and controls development
and architecture evaluation of security solutions and it monitors
alignment with best practices, incident response planning, and;
Manage equipment, service and usage expenses paid to telecom
providers for phone, data circuits, Internet, etc. This includes WAN
costs such as fiber backbone or microwave, whether those WAN
costs are external service provider costs or are provided by internal
resources.
Legal
Handle all matters related to general litigation involving the
corporation;
Perform legal services for securities and corporate financial
transactions, financial reporting and disclosures, business
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Service Provided Description of Services Provided
organizations, mergers, acquisitions and business development,
corporate governance, internal controls and risk management,
insurance, executive compensation;
Manage legal services for commercial and contract law matters for
the corporation, including real estate matters and land use permits;
Serve as board secretary and support corporate governance
functions, board of directors meetings, legal opinion letters, assists
audit and compliance functions, performs and attests internal
controls, and ensures compliance with corporate registration and
regulation;
Retain and manage external counsel to provide legal
representation in specialized areas of law and to manage variable
level legal work;
Legal work supporting the negotiation of water purchase
agreements and other procurement contracts as well as legal work
related to franchise renewals, water rights;
Provide legal advice and representation with regard to intellectual
property matters;
Perform legal services for matters involving environmental law for
the corporation including environmental permitting activities, due
diligence, defense in enforcement actions, compliance advice,
representation in environmental cleanup and environmental
litigation costs;
Provide legal advice, representation and counseling in matters
arising under federal and state water regulatory laws, regulations
and policies as they relate to the Company’s utility related assets
for water and waste water;
Provide risk management services including management of the
insurance and surety bond programs; and,
Manage and administers corporate legal and regulatory
compliance programs, other than Ethics Compliance.
Procurement
Procurement planning and scheduling; RFP, RFQ, RFI creation.
Management of the bidding process which consists of bidder
selection, invitation, bid package preparation and distribution, bid
evaluations, vendor selection, and contract award, including
master agreements.
Corporate
Communications
Media Relations: Research and develop media response,
positioning, and strategy to respond to media inquiries or place
stories in the media. Develop press releases, arrange interviews,
and maintain 24/7 media relations availability. Act as company
spokesperson. Also includes communications resources with
respect to corporate responsibility, etc.
Corporate Awareness Communications or Advertising: General
corporate awareness and brand image purposes, including "issue
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Service Provided Description of Services Provided
advertising". Spend includes agency/vendor fees to create and
execute advertising.
External Informational, Safety, and Educational Communications:
Communications or advertising spend that provides information
and educational messaging on topics such as: billing and payment
options, such as e-billing, budget billing, and direct debit; rate
options; low-income programs, consumer protection and privacy
rights notices; general water efficiency information; public safety,
including "call before you dig" programs; school education
programs; and special educational programs such as
environmental programs.
Product/Service Promotion: Communications or advertising spend
that promotes products or/or services from which the utility will
benefit.
Internal and Intranet Communications: Internal Communications
included Company communications between employees or
departments across all levels, or divisions, of an organization.
Intranet Communications includes posting of content to the internal
intranet, managing intranet user experience, interfacing with IT for
intranet administration, measurement and analysis of intranet
traffic and other data.
External Publication and Communications: Communication
targeted for non-employee audiences (public, media).
Annual Report: Design, production, printing and distribution of the
Annual report, including postage.
Internet Website Content Development and Maintenance:
Development and/or curation of content for all externally facing
company websites.
Social Media Communications: Management and administration of
established corporate social media accounts, such as Facebook,
Twitter, Instagram, and others, and the delivery of content through
those social media channels.
Regulatory Business
Translation of financial data into a State and regulated revenue
requirements, including the preparation of supporting work papers
for rate cases and other regulatory filings;
Internal and external costs for cost of capital and cost of equity
testimony; calculations of formula rates and filings associated with
these calculations;
Oversight and policy guidance on regulatory proceedings;
Management and maintenance of routine State economic
regulatory relationships and contacts;
Management and maintenance of routine regulatory contacts, with
stakeholders;
Monitors issues and advocates positions in federal regulatory
proceedings as they pertain to the Company's businesses;
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Service Provided Description of Services Provided
Rate design and tariff administration activities. This also includes
tariff interpretation activities, marginal cost analyses, and the
pricing and tariff-related aspects of special contracts requiring
regulatory approval;
Participation in technical conferences, monitoring regulatory
activities, and discussing issues with PUC staff; and,
Prepare required State and Federal regulatory reporting for
initiatives including service quality indicator quarterly reports.
Revenue Management The Revenue Management function manages non-revenue water
issues and automatic meter deployment.
Facilities
Manages corporate and shared services facilities as well as certain
other more centrally located facilities. Supports facility remodeling
and renovation efforts.
Business Development
Develop and grow the non-regulated segment, i.e., Environmental
Services;
The costs associated with Business Development are charged to
the non-regulated segment and are not in the M&S fees allocated
to the regulated business units; and,
Manage SUEZ Water’s strategic planning process.
Engineering & Technical
Services
Advises and provide engineering services to assist the operating
companies with planning, operating, maintenance, and
construction functions.
Assist the operating companies in conducting distribution system
surveys, hydraulic analysis, water quality control, system mapping,
charting, and other pertinent statistical analyses.
Provide periodic inspection of company structures including, tanks,
reservoirs, wells, and electrical and mechanical equipment.
Gather all pertinent statistics, reports, cost estimates, studies,
specifications and other data necessary to aid in the construction
of additions or improvements to the sources of supply, treatment
plant, pumping stations, distribution system, and other facilities as
requested by the various operating companies.
Environmental Health
and Safety
Mostly performed by employees embedded in the utility business
units with only two employees providing oversight at M&S.
Customer Care
Provides guidance, training, control and, management reporting for
the Customer Service process;
Standardizes customer service practices throughout the SUEZ
Water regulated business units; and,
Plans for consolidation of operational activities in the future.
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Service Provided Description of Services Provided
Human Resources
The recruitment, screening, and selection of internal and external
candidates;
Establishing relocation programs and management of employee
relocations, including all administration and execution costs of the
relocation program;
Design and administer compensation processes including job
evaluations, annual salary planning, incentive programs, executive
compensation, deferred compensation, long term incentive
programs;
Design, management and implementation of health, prescription,
life insurance, pension and retirement, reimbursement accounts,
employee assistance programs, and other benefits for all
employees;
Manage strategy, negotiations, and contract interpretation. This
includes arbitration resolution, mutual gains bargaining, local
management support on grievances, discipline, adherence to the
contract and training;
Identification, development, and delivery of training programs to
enhance the skills and capabilities of the workforce;
Provide support on Human Resources technology and processes,
technology strategy and solutions, portfolio management,
corporate and ad hoc reporting, data analysis, data integrity and
oversight, and system testing; and, process and release
management;
Succession planning, performance management, career
development, mentoring, executive coaching, career planning &
development, and employee/organizational assessments;
Management and administration of all short and long term disability
programs and FMLA, whether done internally or by a third party;
disability insurance premiums, if any, and the cost of claims for self-
insured programs and insured programs with a deductible; medical
services required by the Company for disability cases, such as
second opinions, consultations, etc.; disability case management
and return to work programs; investigations of short term disability
claims; legal services, whether internal or external, related to
disability cases;
Provide safety training requirements and communication tools,
needs assessments and training program development, and
compliance reporting, including investigation leadership and
support; and,
Labor Relations including contract negotiations and grievance
management.
7. Services Provided by Affiliates Other Than M&S
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In addition to the services provided by the Service Company to its affiliates, services may
on occasion be provided among SNA affiliates. Examples of these services include:
 Emergency response services
 Call center services
 Fleet services
Consistent with the cost allocation principles described above, these services are
provided on a fully-costed basis and are either direct charged to the affiliate receiving the
benefit of the service provided or allocated using an appropriate cost driver.
8. Cost Allocation Methodology
The Company’s approach to cost allocation is as follows:
Direct charge: For those departments performing work related to specific construction
projects, costs are charged directly to the appropriate capital project. Engineering and
Information Technology are the departments to which this most generally applies. In
addition, certain other costs incurred for the benefit of a specific affiliate are charged
directly to that affiliate. Examples include certain legal fees and bank fees.
Segment specific allocation: To the extent practicable, shared services functions are
aligned with the business segments to whom services are provided. For functions
supporting the regulated utility business segment, costs are allocated to the individual
regulated utility affiliates using the three-factor formula described below.
Services benefiting all affiliates: For services provided which benefit all business
segments, costs are allocated based on the three-factor formula described below.1
Three-Factor Formula
The three-factor formula used to allocate costs which are not direct charged is based on
the Massachusetts Formula (MF). The Massachusetts Formula2 consists of Plant,
Revenues, and Labor. However, since there is no authoritative guidance on the specific
definitions of these three components, variations have emerged over time among utilities
using to use the MF. For example, revenues may be defined as top line revenues from
the income statement or as gross margins; plant may be defined as utility plant or as total
assets; and labor may be defined as headcount or as payroll dollars. In all cases, these
variations are sufficiently minor to be considered a Modified Massachusetts Formula.
The specific components of a Modified Massachusetts Formula may vary based on the
individual circumstances and business model of the organization. Based on its
combination of regulated and non-regulated affiliates, an allocator comprised of the

1 The first step in the process is to capitalize that portion of A&G costs associated with the services provided
by M&S. These procedures refer to the allocation of the net remaining balances. Amounts subject to
capitalization are distributed to affiliates each month based on the proportion of direct capital expenditures.
2 It is called the Massachusetts Formula based on the Federal Energy Commission decision in Distrigas of
Massachusetts Corp. (41 FERC ¶ 61,205 (1987))
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following three components best reflects the underlying cost drivers associated with the
circumstances and business model of SNA.
The Company will utilize the following factors, equally weighted:
 Gross Revenue;
 Total Assets, excluding investments in subsidiaries and goodwill; and,
 Payroll.
The three-factor formula used to allocate the M&S costs is determined using the
following process:
Step 1: Calculate the average Revenue, Asset and Payroll for affiliates receiving M&S
services
Separately total the revenue, assets and payroll of all affiliates
SUEZ A $558 $1,669 $906
SUEZ B 2,008 6,312 4,085
SUEZ C 4,428 18,231 9,074
SUEZ D 2,990 10,633 7,754
SUEZ E 4,199 12,550 8,237
SUEZ F (Non Regulated) 3,664 18,776 5,653
SUEZ G (Non-Regulated 1,018 3,131 2,568

Step 2: Determine the percentage of M&S total costs to be allocated to each facility

Company
Revenue
Percent
to Total
(1)
Total
Assets
Percent to
Total
(2)
Payroll
Percent
to Total
(3)
Total %
Average
%
**
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SUEZ D 15.85% 14.91% 20.26% 51.02% 17.01%
SUEZ E 22.26% 17.60% 21.52% 61.38% 20.46%
SUEZ F (Non Regulated) 19.42% 26.33% 14.77% 60.52% 20.17%
SUEZ G (Non-Regulated 5.40% 4.39% 6.71% 16.50% 5.50%
Total 100.00% 100.00% 100.00% 300.00% 100.00%

** This result is the allocation factor for each affiliates share of M&S costs.

Step 3: Allocate M&S O&M Cost to Affiliates

Shared Service: (name of service)

9. Time Reporting Procedures
All employees shall report time to reflect the actual number of productive and non-
productive hours worked. For Engineering, Information Technology and other
employees working on specific projects, time shall be directly charged to those projects.
Total functional area costs, which include employee labor costs, will be allocated using
the three-factor formula to either specific business segments or all affiliates based on the
department to which the employee is assigned and is not based on employee coded time
through the time reporting process.
10. Mid-Year Changes
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17
If a significant organizational modification occurs in mid-year, allocation pools based on
historical usage statistics will be reviewed and modified at that time. In this situation,
allocations using predetermined rates will be modified as part of the following quarterly
true up process.
On occasion, the Company may acquire an affiliate which continues to self-provide
certain services otherwise provided by the Service Company. In those instances, only
those services actually provided by the Service Company to the affiliate will be reflected
in the cost allocation processes described above.
11. Reporting
On a monthly basis, M&S shall make a report available to each affiliates and/or business
segment for the cost of the services received by service provided. In addition, the Service
Company will make available electronically the capability to drill-down on each element
in the invoice.
12. Distribution
Distribution of the CAM shall be made to all holders of the SNA Policy and Procedures
Manuals.
13. Shared Services Assets
Affiliates to whom M&S provides services may use shared assets related to the services
provided, primarily computer hardware and software. Additionally, certain assets are
utilized for the provision of shared services, for example, leasehold improvements.
Historically, the cost of these assets was not recorded at M&S; instead, a portion of the
fully loaded cost of such assets was recorded on the books of each of the affiliates
utilizing those assets at the time the assets were placed in service.

Beginning December 2015, shared assets that have not yet been allocated to the affiliates
using those assets will remain assets of M&S. In lieu of allocating asset balances among
those affiliates, the cost allocation process will include a component representing the
return on and of the asset, that is, depreciation, a return on the net investment in such
assets (including ADIT) and applicable federal and state income taxes. The allocation of
the return on and of the asset cost will be specific to each asset and costs will be allocated
only to those companies utilizing the services provided by those assets. Depreciation
expense shall be recorded at M&S and allocated based upon the proportion of assets
allocated to each business unit. The return component of the allocation shall be
calculated based upon the net asset balance allocated to each business unit at the last
regulated rate of return authorized by the respective regulatory jurisdiction for the
specific business unit.

APPENDIX A
ORGANIZATION CHARTS
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SUEZ North America Legal Structure Organization Chart

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APPENDIX B
Sample Calculation of the Three-Factor Formula (for 2016)

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SUZ-20-02
IPUC DR 109 Page 1 of 1
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cagle

REQUEST NO. 109:
The M&S Shared Assets workpapers, tab labeled 12m 6302020, has a description
stating "Period Ending Dec. 31, 2019" but the sheet includes 2020 numbers. Please
explain the discrepancy and how a report ending in December 31, 2019 includes 2020
numbers. If done in error, please provide an updated excel spreadsheet to include
current 2020 numbers through June 30, 2020. Please also provide supplemental
information through November 30, 2020 in your response.

RESPONSE NO. 109:
In the referenced workpaper, the report (attached as attachment 1 to this response) was
run as of June 30, 2020 and the information beginning in cells B11 through R46 was
updated without revising the heading in cells b3 through b6. The amounts provided are
correct, the header is incorrect.

Also attached as attachment 2 to this response is the same report for the 12 months
ended November 30, 2020. Please note that an error was made in November which
recorded IT Depreciation to Department 424 instead of 427 as it should have been. A
correcting entry is being made in December and the Company will update this response
through December after closing.

CASE NO. SUZ-W-20-02

Response No. 109
Attachment 1

Excel Spreadsheet Provided Separately
in Native Format

CASE NO. SUZ-W-20-02

Response No. 109
Attachment 2

Excel Spreadsheet Provided Separately
in Native Format
SUZ-W-20-02 IPUC DR 110
Page 1 of 1
SUEZ WATER IDAHO INC. CASE SUZ-W-20-02
FIFTH PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: J. Cary

REQUEST NO. 110:
In Order No. 34405 approving the Company's assumption of responsibility for the
cost of handling Western Union transaction costs, the Commission stated, "We also
expect cost reductions in other areas to offset at least a portion if not all of these
transaction costs." The Commission further stated, "We expect Suez to reflect
reduced costs not only in the test year for the general rate case, but to show
associated costs reductions that can be quantified in the regulatory accounts during
the deferral period." Please provide a schedule showing the cost reductions in other
areas that offset the transaction costs, identifying the accounts and the amounts
recorded.

RESPONSE NO. 110:
The Company negotiated a reduction in payment processing fees in October 2019 which
reduced the per transaction cost from $1.99 to just $1.20. This reduced payment
processing expenses by 40% or $0.79 per transaction which would equate to avoided
costs of over $110k based on processing 140,000 electronic payment transactions per
year. The payment processing fees are currently being deferred in account 18699 and
reflect that decrease in payment transaction costs.

Efficiencies were gained by eliminating field payment collection visits during manual
disconnections and in no longer accepting payments in the Company office allowing staff
to perform other field activity work and provide better service to customers calling the
call center for assistance.

Due to the COVID-19 pandemic which necessitated the suspension of collections
activities for the majority of the 2020 year, anticipated cost reductions by increasing the
number of lower-cost telephone notices to customers thereby reducing the number of
higher-cost printed/mailed disconnection notices were not able to be measured.