N O'CONNOR

By. David . Za Counsel for United

DPZ/kmg Enclosure

cc: Per Certificate of Service

0)COZEN O'CONNOR

March 4, 2015

VIA E-FILE

David P. Zambito Direct Phone 717-703-5892 Direct Fax 215-989-4216 dzambito@cozen.com

Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, 2nd Floor North P.O. Box 3265 Harrisburg, PA 17105-3265

Re: Pennsylvania Public Utility Commission v. United Water Pennsylvania Inc.; Docket No. R-2015-2462723

UNITED WATER PENNSYLVANIA INC. PREHEARING MEMORANDUM

Dear Secretary Chiavetta:

Enclosed for filing with the Commission please find United Water Pennsylvania Inc.'s Prehearing Memorandum in the above-referenced proceeding. A copy of this document has been served in accordance with the attached Certificate of Service.

If you have any questions regarding this filing, please direct them to me. Thank you for your attention to this matter.

Sincerely,

LEGAL\22317288\1

305 North Front Street Suite 400 Harrisburg, PA 17101

717.703.5900 877.868.0840 717.703.5901 Fax cozen.com

D id P. Zambito, quire Counsel for United ater Pen sylvania Inc.

CERTIFICATE OF SERVICE Docket No. R-2015-2462723

I hereby certify that I have this day served a true copy of United Water Pennsylvania Inc.'s Prehearing Memorandum, upon the parties, listed below, in accordance with the requirements of 52 Pa. Code § 1.54 (relating to service by a party).

VIA E-MAIL and FIRST CLASS MAIL:

Daniel G. Asmus, Esquire Office of Small Business Advocate Suite 202, Commerce Tower 300 North Second Street Harrisburg, PA 17101-1303 dasmus@pa.gov

Christine Maloni Hoover, Esquire Amy Hirakis, Esquire Lauren M. Burge, Esquire Office of Consumer Advocate 555 Walnut Street Forum Place, 5 th Floor Harrisburg, PA 17101-1923 UWPA2015-EXTERNAL@paoca.org

Gina L. Lauffer, Esquire Phillip C. Kirchner, Esquire Pennsylvania Public Utility Commission Bureau of Investigation & Enforcement Commonwealth Keystone Building 400 North Street, 2 West P.O. Box 3265 Harrisburg, PA 17105-3265 ginlauffer@pa.gov phikirchne@pa.gov

VIA FIRST CLASS MAIL: Amy Patton 174 Sterling Avenue Dallas, PA 18612

DATED: March 4, 2015

LEGAL\22317088\1

BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION

Pennsylvania Public Utility Commission Docket Nos. R-2015-2462723

v. C-2015-2465209 C-2015-2466594

United Water Pennsylvania Inc. C-2015-2468927

PREHEARING CONFERENCE MEMORANDUM OF UNITED WATER PENNSYLVANIA INC.

TO THE HONORABLE ADMINISTRATIVE LAW JUDGE DAVID A. SALAPA:

United Water Pennsylvania Inc. ("UWPA" or the "Company"), by and through its

attorneys, Cozen O'Connor, hereby files this Prehearing Memorandum in the above-captioned

matter, and states as follows:

I. OVERVIEW OF PROCEDURAL HISTORY

1. On January 28, 2015, UWPA filed Supplement No. 42 to Tariff Water - Pa.

P.U.C. No. 7 ("Supplement No. 42"), to become effective March 29, 2015, proposing an increase

in rates designed to produce an increase in base rate revenues of approximately $9.6 million per

year. The $9.6 million increase does not include the current surcharges assessed to customers.

2. UWPA also filed on January 28, 2015, the following materials submitted as

supporting data as required pursuant to 52 Pa. Code §§ 53.52 and 53.53:

(a) Statement of Reasons;

(b) Testimony Binder;

LEGAL\22209954\6

i. Direct Testimony of John D. Hollenbach, UWPA Statement No. 1, Operations and Capital Program

ii. Direct Testimony of Kevin H. Doherty, UWPA Statement No. 2, Revenue Deficiency and Rate Base

iii. Direct Testimony of Caryl D. Jersey, UWPA Statement No. 3, Operating Revenues

iv. Direct Testimony of Thomas L. Lippai, UWPA Statement No. 4, Operating Expenses and Taxes Other Than Income Taxes

v. Direct Testimony of James C. Cagle, UWPA Statement No. 5, Consolidated Income Taxes, IRS Tangible Property Regulations and Holding Company Restructuring

vi. Direct Testimony of Peiling Lin, UWPA Statement No. 6, Cash Working Capital

vii. Direct Testimony of Pauline M. Ahern, UWPA Statement No. 7, Fair Rate of Return

viii. Direct Testimony of Paul Herbert, UWPA Statement No. 8, Cost of Service and Rate Design

ix. Direct Testimony of John Spanos, UWPA Statement No. 9, Depreciation

(c) Exhibit Binder

i. UWPA Exhibit Nos. JDH-1, JDH-2 and JDH-3

UWPA Exhibit No. KHD-1

UWPA Exhibit No. CDJ-1

iv. UWPA Exhibit No. TGL-1

v. UWPA Exhibit No. JCC-1

vi. UWPA Exhibit No. PL-1

vii. UWPA Exhibit No. PMA-1

viii. UWPA Exhibit No. PRH-1

(d) UWPA Exhibit No. JJS-1

2 LEGAL\22209954\6

(e) UWPA Exhibit No. JJS-2

(f) UWPA Exhibit No. JJS-3

(g) Minimum Filing Requirements I Through IV Binder

(h) Minimum Filing Requirements V Through XI Binder

(i) Confidential Filing Requirements Binder (Sealed Envelope).

3. On February 2, 2015, the Office of Consumer Advocate ("OCA") filed a Formal

Rate Complaint at Docket No. C-2015-2465209. On February 10, 2015, OCA entered a Notice

of Appearance in the instant rate case.

4. On February 5, 2015, the Office of Small Business Advocate ("OSBA") entered a

Notice of Appearance in the instant rate case and filed a Formal Rate Complaint at Docket No.

C-2015-2466594.

5. On February 11, 2015, the Bureau of Investigation & Enforcement ("I&E")

entered a Notice of Appearance.

6. On February 19, 2015, Amy Patton filed a Formal Complaint at Docket No. C-

2015-2468927.

7. By Order entered February 26, 2015, the Commission directed the investigation

of UWPA's proposed increase in base rates, and suspended Supplement No. 42 until October 29,

2015.

8. On February 26, 2015, the Commission issued a notice scheduling an Initial

Prehearing Conference in the above-captioned matter for March 6, 2015, in Harrisburg,

Pennsylvania before Administrative Law Judge ("ALP) David A. Salapa.

3 LEGAL\22209954\6

9. On February 26, 2015, All Salapa issued a Prehearing Conference Order,

requiring the parties to file and serve on or before Wednesday, March 4, 2015, initial prehearing

conference memoranda.

10. On March 4, 2015, UWPA filed a suspension tariff supplement in compliance

with the Commission's February 26, 2015 Order.

11. On March 4, 2015, UWPA, at the request of the Commission's Bureau of

Technical Utility Services, filed a revised page 2 to rate case tariff supplement to correct a

typographical error in the pagination.

II. SERVICE OF DOCUMENTS

12. Paragraph 2 of ALJ Salapa's Prehearing Conference Order provides that each

party will be limited to one entry on the service list. Accordingly, please list Attorneys David P.

Zambito and D. Troy Sellars collectively on the service list on behalf of UWPA using the

following contact information:

David P. Zambito, Esquire (PA ID No. 80017) D. Troy Sellars, Esquire (PA ID No. 210302) Cozen O'Connor 305 North Front Street, Suite 400 Harrisburg, PA 17101-1236 Phone: 717-703-5892 Fax: 215-989-4216 E-mail: dzambito@cozen.com

tsellars@cozen.com

UWPA agrees to receive service of documents electronically in this proceeding. UWPA's

attorneys are authorized to accept service on behalf of UWPA in this proceeding. UWPA

requests that the Commission and all parties of record serve copies of all discovery requests and

4 LEGAL\22209954\6

answers, correspondence, Commission Orders, and any other documents issued in this

proceeding on its attorneys in Harrisburg, Pennsylvania.

III. WITNESSES AND ISSUES

13. Below is a list of the witnesses and the areas of their testimony comprising

UWPA's initial direct case in this proceeding. The subject matters listed below represent as

complete a statement of issues that UWPA can provide at this stage of the proceeding. Further

definition of contested issues by the parties will develop within the scope of the subject matters

listed below during the course of the proceeding. As an overview of its case-in-chief, UWPA

posits that the rate proceeding contains the following issues for which it has the burden of proof

and which will be addressed in direct testimony:

(a) Rate base;

(b) Existing and future revenue;

(c) Taxes;

(d) Rate of return;

(e) Operating and maintenance expenses;

(f) Rate structure;

(g) Other tariff changes; and,

(h) Quality of service.

14. To address the above noted issues, UWPA presently intends to offer the following

witnesses to testify in this proceeding on the following general subject matters:

5 LEGAL\22209954\6

WITNESS AREAS OF EXPERTISE

A. John D. Hollenbach, a. Operations and Capital additions. General Manager and Vice President United Water Pennsylvania Inc. 4211 East Park Circle Harrisburg, PA 1711

(717) 564 - 3664

B. Kevin H. Doherty Director of Regulatory Business United Water Management and Services, Inc. 200 Old Hook Road Harrington Park, NJ 07640

(201) 767 - 9300

C. Caryl D. Jersey Senior Regulatory Specialist United Water Management and Services, Inc. 200 Old Hook Road Harrington Park, NJ 07640

(201) 767 - 9300

D. Thomas L. Lippai Senior Regulatory Specialist United Water Management and Services, Inc. 200 Old Hook Road Harrington Park, NJ 07640

(201) 767 - 9300

a. Revenue Deficiency and Rate Base

a. Normalized Revenue

a. Operating Expenses and Taxes Other Than Income Taxes

E. James C. Cagle a. Consolidated Income Taxes; Vice President — Regulatory Business b. IRS Tangible Property Regulations; and United Water Management c. Holding Company Restructuring and Services, Inc. 200 Old Hook Road Harrington Park, NJ 07640

(201) 767 - 9300

6 LEGAL\22209954\6

WITNESS AREAS OF EXPERTISE

F. Peiling Lin Rate Analyst United Water Management and Services, Inc. 200 Old Hook Road Harrington Park, NJ 07640

(201) 767 - 9300

G. Pauline M. Ahern, Partner Sussex Economic Advisors, LLC 161 Worcester Road, Suite 503 Framingham, MA 01701

(508) 202 - 7918

a. Cash Working Capital

a. Fair Rate of Return

H. Paul Herbert a. Cost of Service Allocation President, Gannett Fleming Valuation b. Customer Rate Design and Rate Consultants, LLC 207 Senate Avenue Camp Hill, PA 17011

(717) 763 - 7211

I. Jolm J. Spanos, Senior Vice President a. Depreciation Study and Depreciation Expense. Gannett Fleming Valuation and Rate Consultants, LLC 207 Senate Avenue Camp Hill, PA 17011

(717) 763 - 7211

15. UWPA reserves the right to call additional witnesses and present testimony on

additional issues that may arise during the course of the proceeding.

IV. DISCOVERY

16. To date, the Company has received and responded to, or is the process of

responding to, interrogatories from OCA, I&E and OSBA. The Company encourages the use of

7 LEGAL\22209954\6

informal discovery processes as the proceeding progresses. The Company is not aware of any

discovery difficulty.

17. UWPA understands that OCA intends to request certain modifications of the

standard discovery rules to shorten both the objection and response time periods and to expedite

the dispute resolution process. UWPA has no objection to the suggested modifications as set

forth in OCA's Prehearing Memorandum.

V. LITIGATION SCHEDULE

18. UWPA proposes the following schedule for resolution of this proceeding, which

has been agreed to by all of the active parties:

Description Date Prehearing Conference March 6, 2015 Other Parties' Direct Testimony April 17, 2015 Settlement Conference NLT April 24, 2015 Rebuttal Testimony May 8, 2015 Surrebuttal Testimony May 28, 2015 Outline of Expected Oral Rejoinder June 3, 2015 Evidentiary Hearing with Oral Rejoinder June 4 — 5, 8, 2015 Main Briefs June 26, 2015 Reply Briefs July 14, 2015

19. To accommodate a conflict with one of OCA's witnesses, the parties have agreed

that if examination is needed regarding the testimony of Mr. Thomas Caitlin, it will be conducted

on Monday, June 8, 2015. It is anticipated that all other evidentiary matters will be presented on

June 4 and 5, 2015.

20. The preceding dates for testimony are "in-hand" delivery in Harrisburg. UWPA

requests that testimony and exhibits be delivered electronically by 4:30 p.m. on the due date,

with follow-up hard copy by first-class mail or hand delivery.

8 LEGAL\22209954\6

espectfully submitted,

21. With regard to the schedule, UWPA is not aware of any substantial public interest

being expressed that would warrant the scheduling of a public input hearing.

VI. SETTLEMENT DISCUSSIONS

22. UWPA remains open and available for settlement discussions with the other

parties. The Company expects to undertake settlement negotiations at the earliest time available.

While the Company is interested in early settlement discussions, it has, nonetheless, suggested a

date certain by which a Settlement Conference will occur in order to ensure that initial settlement

discussions occur in a timely manner.

Dated: March 4, 2015 Da id P. Zambito A ID No. 80017) D. Troy Sellars, A ID No. 210302) Cozen O'Connor 305 North Front Street, Suite 400 Harrisburg, PA 17101-1236 Phone: 717-703-5892 Fax: 215-989-4216 E-mail: dzambito@cozen.com

tsellars@cozen.com

9 LEGAL\22209954\6