20221223_Veolia to Staff Attachment - Response to No. 43.pdf

VEO-W-22-02 IPUC DR 43 Page 1 of 1
VEOLIA WATER IDAHO, INC. CASE VEO-W-22-02 THIRD PRODUCTION REQUEST OF THE COMMISSION STAFF
Preparer/Sponsoring Witness: Zerhouni REQUEST NO. 43:
Please provide a copy of the Cost Allocation Manual ("CAM") in Word and PDF format.

RESPONSE NO. 43:
Please see attached Attachment 1 and Attachment 2 for copies of the Cost Allocation
Manual in Word and PDF format. Please note that Company names, the list of affiliates, and
organizational chart has not been updated since the change in control. However, the general
principles, services provided and cost allocation methodology remains the same.
VEO-W-22-02 IPUC DR 43 Attachment

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-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 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 Inc.

SUEZ Water Management & Services,
Inc. (M&S)
M&S provides administrative, engineering, legal,
processing, customer service, billing, public
collectively known as “Shared Services” to the operating subsidiaries of SNA.

SUEZ Water Environmental Services, Inc.
subsidiaries:
• Bayonne Water
• Middletown Water
• SUEZ Water Indiana
• SUEZ Water Long Island
• SUEZ Water Mississippi
SUEZ Treatment Solutions Inc. water treatment solutions and services.

SUEZ Utility Services Group
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 the CEO, the Office of the COO, and other executive positions not

Financial Planning
Assessing the business environment; identification of key issues;
examination of alternatives; developing multi-margin, cash, O&M, and capital plan; modeling the financial impact
forecasting for regulatory filings; performing analytic support for
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
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-various scenarios for business unit decision-making.

Accounting and Tax
analysis to support accounting;
Managing the accounting for fixed assets including: work order creation and set-up, analysis and monitoring of capital projects;
preparation o
reconciliations; reporting of plant asset information for financial, audits, regulatory reporting, rate cases or other internal needs;
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 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
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,
administration of transactions and daily settlement, determining daily cash position, and costs for issuing and paying agents;
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
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-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;
computing devices, software, LANs and peripherals;
Manage the installation, operation, and on-going network security
systems including firewalls,
administration), etc.;
Architecture design, implementation, technical support, problem
patches for operating and financial systems;
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
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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;
functions, board of directors meetings, legal opinion letters, assists
controls, and ensures compliance with corporate registration and regulation;
representation in specialized areas of law and to manage variable level legal work;
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
representation in environmental cleanlitigation costs;
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,
compliance programs, other than Ethics Compliance.

Procurement
Procurement planning and scheduling; RFP, RFQ, RFI creation.
selection, invitation, bid package preparation and distribution, bid
master agreements.

Corporate Communications
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
respect to corporate responsibility, etc.
Corporate Awareness
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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:
and educational messaging on topics such as: billing and payment options, such as e-billing, budgeoptions; low-income programs, consumer protection and privacy rights notices; general water efficiency information; public safety,
programs; and special educationaenvironmental programs.
Product/Service Promotion: Communications or advertising spend
benefit.
included
Intranet Communications includes posting of content to the internal intranet, managing intranet user experience, interfacing with IT for intranet atraffic 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.
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;
regulatory relationships and contacts;
Management and maintenance of routine regulatory contacts, with stakeholders;
Monitors issues and advocates positions in 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-regulatory approval;
activities, and discussing issues with PUC staff; and,
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
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.
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;
evaluations, annual salary planning, incentive programs, executive
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
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,
corporate and ad hoc reporting, data analysis, data integrity and
management;
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
second opinions, consultations, etc.; disability case management and return to work programs; investigations of short term disability claims; legal services, whether internadisability cases;
support; and,
Labor Relations incmanagement.

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

Company Revenue
(000)
Total Assets
(000)
Payroll
(000)
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
Total $18,865 $71,302 $38,277
Step 2: Determine the percentage of M&S total costs to be allocated to each facility
Calculate the percent to total for each affiliates revenue, assets and payroll
Determine the average of (1) + (2) + (3) for each company

Company
Revenue
Percent to Total
(1)
Total Assets Percent to Total
(2)
Payroll Percent to Total
(3)
Total %
Average %
**
SUEZ A 2.96% 2.34% 2.37% 7.67% 2.56%
SUEZ B 10.64% 8.85% 10.67% 30.17% 10.06%
SUEZ C 23.47% 25.57% 23.71% 72.75% 24.25%
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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
Multiply the allocation factor, determined in step two above, by the actual prior year costs for each shared service for each individual operating utility or business segment
Company Service (000)
MMF Allocation Factor Allocated Cost (000)
Shared Service: (name of service)
SUEZ A $21,542 2.56% $549
SUEZ B $21,542 10.06% $2,158
SUEZ C $21,542 24.25% $5,202
SUEZ D $21,542 17.01% $3,649
SUEZ E 21,542 20.46% $4,389
SUEZ F (Non Regulated) $21,542 20.17% $4,326
SUEZ G (Non-Regulated $21,542 5.50% $1,179
Total $21,542 100.00% $21,542

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)

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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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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