JOINT NEWS RELEASE
CITY OF ATLANTA AND UNITED WATER ANNOUNCE AMICABLE DISSOLUTION OF TWENTY-YEAR WATER CONTRACT

Atlanta, January 24, 2003— Today, Mayor Shirley Franklin and Michael Chesser, Chairman and CEO of United Water, reached an agreement to seek to dissolve the Twenty-Year Operations and Maintenance Agreement (“the Agreement”) between United Water and the City of Atlanta on mutually agreeable terms.

United Water has been responsible for operating and maintaining the City’s water supply system pursuant to the parties’ twenty-year agreement since January 1, 1999. The Mayor and United Water now agree that it is not in the best interest of the City, its water customers, and United Water to continue the Agreement.

As part of the dissolution, United Water will assist in the smooth and orderly transition of the water system back to City management. The City will operate and maintain the system through the newly organized Bureau of Water in the Department of Watershed Management headed by Commissioner Jack Ravan.

“After careful consideration, the City of Atlanta and United Water have agreed that the twenty-year contract is not in the best interest of either party,” said Mayor Franklin. She added, “I am confident that the City’s new Bureau of Water will provide high quality and dependable drinking water at an affordable cost. We are taking all measures necessary to ensure that we will have a smooth transition from United Water to the City.”

Mayor Franklin emphasized that United Water has improved the quality of its operations in the past five months. “We have seen significant progress dating back to the Contract Correction Period,” said Mayor Franklin, referring to the 90-day assessment period when the City tracked the company’s performance measures through a scorecard system. “The joint decision to dissolve the relationship reflects the City’s and United Water’s conviction that the contract does not accommodate the reasonable customer service and business interests of both parties.”

“Today’s announcement is the result of the partnership approach Mayor Franklin and I have taken to addressing the challenges of operating the City’s water system,” said United Water’s Chesser. “The first step we agreed on was to improve performance. United Water did that. Then we looked together at the contract to determine if it could effectively guide our partnership going forward, and Mayor Franklin and I agreed that it did not provide an economically viable framework.” Chesser added, “United Water is proud to have made significant improvements to the City’s water system including the virtual elimination of an enormous and unexpected backlog. And we are pleased to have worked together with the City to reach the most satisfactory agreement for both parties.”

Representatives of the City and United Water already have reached agreement on a variety of legal and financial issues that have arisen during the life of the contract. Under that agreement, expected to go before City Council for approval shortly, United Water will pay the City $6 million and the City will pay United Water $1 million in full settlement of all legal claims.

The parties are expected to spend the next week ironing out the details of the transition period. Said the Mayor, “I expect the parties to continue to work in good faith to resolve the remaining issues. We are confident that the City and United Water will work together cooperatively to ensure a smooth transition.”