Expansion on tap for United Water

Tuesday, May 11, 1999

By KEVIN G. DeMARRAIS
Staff Writer

United Water Resources Inc. announced Monday that it has formed an alliance with a large Texas-based software developer to market billing and management services to municipalities and utilities throughout the country.

The agreement with Electronic Data Systems Corp. of Plano, Tex., or EDS, was announced at United Water's annual meeting in Park Ridge.

It is intended to give the Harrington Park-based utility a well-connected partner and stronger credentials to grow beyond its original North Jersey water supply business, said Donald Correll, chairman and chief executive.

Although United Water derives most of its income as a regulated utility for Bergen and Hudson counties in New Jersey and Rockland County in New York -- "It's the engine that still drives this company," Correll said -- it's biggest recent growth has been managing water supply and wastewater treatment systems elsewhere through public-private partnerships.

"It's the fast growing part of the water services industry," Correll said. Last year alone, United Water won contracts to operate municipal systems in Atlanta, Milwaukee, San Antonio, Texas, and Gary, Ind., and it is actively competing for 20 additional projects, including one to operate the Bergen County Utilities Authority wastewater system, Correll said.

The BCUA decision is expected by this summer, he said.

In addition, United Water is one of four finalists in Birmingham, Ala., and it has been tentatively selected to run the Rahway system, he said.

United Water's strategy of moving outside Bergen County, and the deal with EDS, have been well-received on Wall Street. The company's stock has almost doubled in value in the past 41 months, and it closed Monday at $23.12 1/2, up $1.69 a share, moving it within 87 1/2 cents of its 52-week high.

Municipalities are attracted to public-private partnerships because they gain the utilities' professional management -- including their expertise in uncovering missing meters and billing procedures that cost some municipalities millions of dollars in lost revenue -- without losing ownership of their water-supply systems, he said.

The deal with EDS adds to United Water's credentials and can help it attain its goal of doubling the number of people it serves over the next five years, he said.

United Water and EDS have worked together on several projects, including its management of the Jersey City water system, but the formal agreement takes the relationship a step further, Correll said. "This commits us to work with them, and it commits them to work with us," he said.

The system they will market -- Customer*STAR II, a Windows-based information and billing system -- will be central in proposals to manage entire water systems, it could also be offered by itself for municipalities seeking to improve billing operations, Correll said.

United Water provides water services to 7.5 million people in 19 states, and had revenues of $356 million last year. EDS has more than 9,000 business and government clients in 50 countries, and had $16.9 billion in revenues last year.