IURC News Release

Indiana Utility Regulatory Commission

302 West Washington Street, Room 306

Indianapolis Indiana 46204

317.232.2297 office

317.233.1982 fax

www.state.in.us/iurc

Contact: Mary Beth Fisher

For Immediate Release

December 4, 2002

IURC IMPLEMENTS SAFEGUARDS TO PROTECT INDIANA-AMERICAN RATEPAYERS

Today, the Indiana Utility Regulatory Commission approved an order, in Cause No 42250, setting safeguards to protect Hoosier ratepayers if the Indiana-American Water Company is sold to the German based holding company, RWE.

The Commission used the limited powers available to it in an effort to ensure reasonable rates and quality service in Indiana after the Indiana water company is acquired by foreign investors.

The Commission has learned from previous experience that the purchase of a regulated utility by a non-regulated holding company can result in the deterioration of customer service. After careful consideration of the evidence in this case, the Commissioners are not convinced that the benefits of the merged company will outweigh the potential risks to the citizens of Indiana. The safeguards put in place by today’s order include:

• For a period of three (3) years after the acquisition, Indiana-American must provide the Commission with written notice 30-days prior to any planned workforce reduction greater than 5-percent of Indiana-American’s existing workforce.

• For at least one year after the acquisition there shall be no layoffs or involuntary severance of employees, except for cause.

• Except for resignations, Indiana-American shall retain the existing management for at least one year from the acquisition.

• Indiana-American cannot force its customers to pay any costs associated with the sale.

• Indiana-American must maintain its equity level no lower than 35% of total investor supplied capital, and notify the Commission in writing within 30 days after the implementation of any change in its equity ratio of greater than five percentage points.

• The company will have 30-days to report any upgrade or downgrade of the bonds of RWE, Thames Water Plc, or American Water Capital Corp. by Moody’s or Standard and Poor’s.

• Indiana-American will provide Annual Reports of its parent company to the Commission, in English.

• The company will implement a system to electronically track customer complaints in order to document the nature and response times to those complaints and report those findings to the Commission annually.

• Indiana-American must develop and implement a mechanism to track the savings and costs from the sale, and a methodology beneficial to ratepayers to allocate those savings and costs.

RWE is active in more than 120 companies on six continents. Indiana-American serves 264,000 customers in 21 Indiana counties.

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