State of New York Public Service Commission

STATE OF NEW YORK PUBLIC SERVICE COMMISSION

Verified Joint Petition of Veolia Environnement S.A., Veolia North America, Inc., SUEZ S.A., and SUEZ Water New York Inc. for Approval Pursuant to Section 89-h Case 21-W-____ of the Public Service Law of the Acquisition of SUEZ S.A. by Veolia Environnement S.A.

VERIFIED JOINT PETITION OF VEOLIA ENVIRONNEMENT S.A., VEOLIA NORTH AMERICA, INC., SUEZ S.A., AND SUEZ WATER NEW YORK INC. FOR APPROVAL PURSUANT TO SECTION 89-H OF THE PUBLIC SERVICE LAW OF THE ACQUISITION OF SUEZ S.A. BY VEOLIA ENVIRONNEMENT S.A.

Kevin M. Lang Brian T. FitzGerald Amanda De Vito Trinsey Gregory G. Nickson Julie A. Yedowitz Cullen And Dykman LLP Couch White, LLP 80 State Street 540 Broadway Suite 900 Albany, New York 12207 Albany, New York 12207 518-426-4600 518-788-9440 [email protected] [email protected] [email protected] [email protected] [email protected]

Counsel for Veolia Environnement Counsel for SUEZ S.A. and S.A., and Veolia North America, Inc. SUEZ Water New York Inc.

Dated: June 11, 2021 STATE OF NEW YORK PUBLIC SERVICE COMMISSION

VERIFIED JOINT PETITION

I. INTRODUCTION

This Petition is submitted jointly to the New York State Public Service Commission

(“Commission”) pursuant to Public Service Law (“PSL”) § 89-h and the Commission’s

Regulations,1 and any other statutory or regulatory provisions deemed applicable, by Veolia

Environnement S.A. (“Veolia”), a French société anonyme and Veolia North America, Inc., a

Delaware corporation and wholly-owned subsidiary of Veolia (“Veolia North America”), SUEZ

S.A., a French société anonyme (“SUEZ”), and SUEZ Water New York Inc., a New York corporation and wholly-owned indirect subsidiary of SUEZ (“SUEZ Water New York”). The parties are collectively referred to herein as “Petitioners.”

Petitioners seek the Commission’s expedited approval by mid-November 2021 of Veolia’s acquisition of a majority or all of the outstanding shares of SUEZ in accordance with a

Combination Agreement entered into between those entities on May 14, 2021. As a result of this acquisition, Veolia will acquire all of SUEZ’s equity interests in SUEZ Water New York (the

“Transaction”). As discussed in more detail below, and in the pre-filed Direct Testimony of Keith

1 16 NYCRR Parts 18, 31, and 39.

2 Oldewurtel on behalf of Veolia and the pre-filed Direct Testimony of Chris Graziano and James

Cagle on behalf of SUEZ (together, the “Testimony”) submitted concurrently with this Petition in

Attachments A and B, respectively, the Transaction will not have any adverse impacts on SUEZ

Water New York customers or employees, there may be increased opportunities in the future to leverage new technologies and innovative practices developed by Veolia for other parts of its water management businesses, and Veolia will provide multiple positive benefits to customers. These benefits include continuation of SUEZ Water New York’s capital plan, continuation and potential improvements to customer service, continued robust access to the financial markets, and continued and possibly expanded community engagement. Moreover, Veolia will commit to providing financial support to reduce arrearages caused by the COVID pandemic and to accelerate efforts to provide relief to low income customers, with the details to be determined in consultation with

Department Staff. For all of these reasons, and the additional reasons set forth herein and the attached Testimony, the Transaction is in the public interest and should be approved.

II. THE PARTIES TO THE TRANSACTION

A. Veolia Veolia is headquartered in Paris, France and is listed on Euronext Paris under the symbol

VIE. Veolia’s primary business activities include: (1) water management and technology services, including the management of water and wastewater utilities and the manufacturing of water treatment systems, (2) waste management services, including collection and treatment of non- hazardous, hazardous, and specific waste, and (3) energy services, including sustainable energy management solutions for local authorities and companies. Veolia is a leading expert in water cycle management, from producing and supplying drinking water to collecting, treating, recovering, and recycling wastewater. Through its entities and subsidiaries around the world,

Veolia manages 3,362 water production plants and 2,737 wastewater treatment plants.

3 Veolia has over 178,000 employees in 55 countries, including over 7,800 employees in

North America. Veolia’s customers, which include municipalities, industrial and commercial businesses, and individuals, are located across the globe. It is a trusted supplier of services to U.S. and other governmental customers. Globally in 2020, Veolia was responsible for supplying 95 million people with drinking water and 62 million with wastewater services.

B. Veolia North America

Veolia North America is a leading provider of operations management and maintenance services for drinking water and wastewater systems via partnerships with municipal entities. It has developed an innovative consultancy and performance-based contract model to help cities, such as New York and Washington, D.C., identify efficiency opportunities and implement improvements to their systems. Veolia’s water technology business designs and manufactures water clarification and purification, softening, disinfection, desalination, purification, and mobile drinking water production systems for municipal and industrial customers. Veolia North America also sells these systems to engineering firms who in turn use its water technology systems in building and designing projects for municipal and industrial customers.

C. SUEZ

SUEZ is headquartered in Paris, France and is listed on Euronext Paris under the symbol

SEV. SUEZ’s primary business activities include: (1) water management and technology services, including worldwide municipal water activities and the manufacturing of water treatment systems, and (2) waste management services, including general waste management, hazardous waste treatment, and other environmental solutions for industrial and municipal customers. SUEZ employs nearly 90,000 people worldwide and has operations in all fifty states of the United States, including New York.

4 D. SUEZ Water New York

SUEZ Water New York is a water-works corporation organized under the laws of the State of New York with its principal office located at 162 Old Mill Road, West Nyack, New York 10994.

SUEZ Water New York owns and operates a public water supply system, including drinking water and water for fire protection, that delivers water to more than 120,000 residential, non-residential, and fire-protection customers in parts of Rockland, Orange, Westchester, Tioga, and Putnam counties. By Commission Order, SUEZ Water New York was appointed Temporary Operator for the water systems of Knolls Water Company, Inc. in Orange County, New York and Boniville

Water Company, Inc. in Putnam County, New York, with nearly 170 customers combined.2 SUEZ

Water New York’s affiliates, SUEZ Sewer New York Inc. and SUEZ Water South County Inc., provide wastewater services to nearly 3,150 customers in the State of New York.

SUEZ Water New York is an indirect, majority-owned subsidiary of SUEZ. More specifically, SUEZ Water New York is a wholly-owned subsidiary of SUEZ Water Resources

LLC (“SWR”), a Delaware limited liability company. SWR also owns eight other water and wastewater utilities in Delaware, New Jersey, New York, Pennsylvania, Rhode Island, and Idaho, as shown in Attachment D. As shown in Attachment D, SUEZ indirectly owns 80% of SWR, and the remaining 20% of SWR is indirectly held by Stichting Depositary PGGM Infrastructure Funds, acting in its capacity as title holder of PGGM Infrastructure Fund (“PGGM”), which forms part of the PGGM NV group, a cooperative Dutch pension fund service provider that manages pension funds and assets, and invests in public and private equity, debt, real estate funds, and infrastructure markets across the globe. The Transaction is not expected to have any impact on PGGM’s

2 Case 18-W-0545, Proceeding on Motion of the Commission as to the Acts and Practices and Adequacy of Service Provided by Boniville Water Company, Inc. and Knolls Water Co., Inc. Order Appointing Temporary Operator (issued March 14, 2019).

5 investment in SWR, as Veolia will acquire only SUEZ’s ownership shares in SWR and SUEZ

Water New York.

E. Organization Charts and Corporate Documents

Petitioners have attached hereto as Attachments C and D copies of Veolia’s and SUEZ’s pre-acquisition organization charts, respectively. Veolia is still developing its post-acquisition organization chart and will provide it to the Commission when it is complete. Due to the multinational nature of the Transaction and the Companies’ respective holdings, incorporating the

SUEZ entities into the Veolia corporate structure is complex and requires careful tax and business planning. In any event, SUEZ Water New York will be an indirect, majority-owned subsidiary of

Veolia under the current SUEZ North America organization or an indirect subsidiary of Veolia under Veolia North America. To assist with the review of this Petition and for illustrative purposes only, Veolia provides in Attachment E organization chart alternatives showing the two most likely structures for incorporation of SUEZ and its subsidiaries. Veolia will advise the Commission once the post-acquisition organizational structure is finalized.

Certificates of incorporation or formation, as applicable, for Veolia and Veolia North

America are collectively provided in Attachment F. Certificates of incorporation or formation, as applicable, for SUEZ and SUEZ Water New York are collectively provided in Attachment G. For convenience purposes, English translations of the French certificates are included where available.

III. THE PROPOSED TRANSACTION

Veolia and SUEZ have been global leaders in water resource management for over 150 years. By combining the strengths of the two companies, Veolia seeks to cement itself as a global leader in the water and waste management sectors to lead the market in ecological issues and better compete in the global marketplace. Veolia and SUEZ have developed similar services and

6 technologies, particularly in water treatment and distribution. By combining the expertise and commercial offerings of both companies in water treatment and water storage, Veolia plans, on a global level, to accelerate its development of technological solutions to, inter alia, improve the customer experience, satisfy the need for safe and sufficient supplies of water, offer greater value to its customers, and present more opportunities and value for its employees and shareholders.

Further, Veolia will be able to leverage the combined experience and intellectual capability of the two companies to meet future challenges, including the increasing demand for clean water, compliance with more stringent regulatory requirements, climate change, the rising costs of drinking water and affordability, and, as demonstrated by the past year, responding to threats posed by COVID-19 and future potential widespread health crises.

In October 2020, Veolia acquired approximately 29.9% of the share capital and voting rights of SUEZ from ENGIE S.A. The European Commission determined that Veolia’s proposed acquisition of SUEZ by first acquiring the ENGIE S.A. block of shares and subsequently issuing a tender offer for the remaining shares was a single transaction. Pursuant to Article 7(2) of the

European Commission’s Merger Regulations, Veolia does not have the right to exercise any voting rights attached to the 29.9% shares until the European Commission approves the Transaction.3

Accordingly, Veolia does not have the ability to control or influence any decisions by SUEZ management or its Board of Directors, and the two companies remain separate and independent from each other. Because of Veolia’s plan to acquire all of SUEZ and the above determination, regulatory approval for the initial share acquisition from ENGIE S.A. was deferred to this time and is sought as part of the Transaction. If the Commission determines that separate approval for

3 There are exceptions to this general rule for specific limited matters not relevant here, and such exceptions are subject to the prior approval of the European Commission.

7 the initial acquisition is needed, Petitioners respectfully request that the earlier acquisition be approved herewith.

The Transaction at issue herein involves a public tender offer (the “Tender Offer”) for the remaining share capital of SUEZ. Veolia announced the Tender Offer to acquire all of the shares of SUEZ it does not already hold in order to give it full control over SUEZ. The Tender Offer was filed with the French financial market authority (Autorité des marchés financiers [“AMF”]) on

February 8, 2021.

On April 12, 2021, Veolia and SUEZ announced that they reached an agreement in principle on the key terms and conditions of the combination of the two companies with a view to entering into a definitive agreement by May 14, 2021. A Combination Agreement between Veolia and SUEZ was executed on May 14, 2021. The Combination Agreement, which is attached hereto as Attachment H, sets forth the terms and conditions of the combination of the two companies through an improvement to the Tender Offer to be filed by Veolia with the AMF.4 The

Combination Agreement was approved by Veolia’s and SUEZ’s Boards of Directors on May 14,

2021. Subject to satisfaction of certain conditions precedent and receipt of regulatory approvals, and in order to minimize market volatility, Veolia and SUEZ seek to consummate the Transaction by the end of 2021.

The Combination Agreement provides for an increase in the Tender Offer from €18

($21.60) per share (with dividend) to €20.50 ($24.60) per share (with dividend) (the “Improved

4 The Combination Agreement is written in French. Attachment H includes a copy in French and an English translation and is being filed with the Commission’s Records Access Officer with a request that it be protected from public disclosure pursuant to the Commission’s trade secret regulations (16 NYCRR §6-1.3).

8 Tender Offer”),5 the recommendation of the Improved Tender Offer by SUEZ’s Board of Directors to SUEZ’s shareholders, and the sale of certain of SUEZ’s assets to Meridiam, Global

Infrastructure Partners, Caisse des Dépôts et Consignations, and CNP Assurances (collectively, the “Consortium”) to be used for the creation of an independent, “New SUEZ” entity.6

With the Combination Agreement in place, the Improved Tender Offer is expected to be submitted to the AMF on or about June 30, 2021. Upon closure of the Improved Tender Offer and notification of the results by the AMF, and provided that the results of the Improved Tender offer show Veolia holds more than 50% of the share capital of SUEZ,7 Veolia will proceed with the acquisition and payment for the shares tendered. In addition, if the results of the Improved Tender

Offer show Veolia holds more than 50% of the share capital of SUEZ, the Improved Tender Offer will be automatically reopened for an additional period of at least 10 trading days to attract further tenders (the “Reopened Offer”).

Following closure of the Improved Tender Offer and/or the Reopened Offer, Veolia also may be in a position to launch a squeeze-out procedure to automatically acquire the remaining minority shareholdings of SUEZ at the same terms of the Improved Tender Offer, provided the results of the Improved Tender Offer and/or the Reopened Offer show the remaining minority

5 Because this is a deal among French companies, all amounts are expressed in Euros. For convenience purposes, Petitioners provide U.S. dollar equivalents using a conversion factor of $1.20 per €1, which is the approximate rate as of the time of preparation of this Petition. 6 A small group within SUEZ – SUEZ Smart Solutions – provides data collection services to municipalities to support their resilience, environmental, and digital transformation. This group operates out of Paris but offers services around the world, including within the United States, and will remain with the New SUEZ entity. 7 Pursuant to French securities laws, the Improved Tender Offer will be null and void if the results of the process do not lead to Veolia holding more than 50% of the share capital of SUEZ.

9 shareholdings of SUEZ does not represent more than 10% of the share capital of SUEZ.8 Because its final shareholdings are subject to the results of the above future activities, Veolia cannot state at this time the exact percentage of the SUEZ shares it will acquire. However, given the

Combination Agreement and the support for the Improved Tender Offer from the SUEZ Board of

Directors, Veolia fully expects to gain control of SUEZ, and by virtue thereof, of the SUEZ subsidiaries and assets in the United States, including SUEZ Water New York.

Veolia and SUEZ are seeking to close the Transaction in late 2021. The North American businesses are important to the overall transaction, and approval from the Commission and other

U.S. public utility commissions is critical. However, this is a global transaction occurring in

France between two French companies, and there is need to harmonize the time frames for all approvals and required processes. Moreover, because of the nature of the Transaction – a public tender offer, there is a need to minimize market uncertainty and volatility. The acquisition also involves tens of thousands of SUEZ employees worldwide, and both companies want to minimize the instability and disruption to their employees.

A separate consideration is that the Transaction requires a multitude of governmental approvals, and the companies are concurrently seeking all such approvals. It is important that all approvals be obtained within the same time frame so the entire Transaction is not unduly delayed.

Indeed, the broad scope of the Transaction – involving businesses in dozens of countries – and the need for almost 20 governmental approvals adds to the market uncertainty and underscores the need for an expeditious closing.

8 Under the AMF General Regulation, Veolia can undertake this procedure only if the remaining minority shareholders do not represent more than 10 percent of the share capital and voting rights of SUEZ.

10 IV. SUEZ WATER NEW YORK’S OPERATIONS AND ACTIVITIES WILL NOT CHANGE AS A RESULT OF THE TRANSACTION

The Transaction involves the acquisition of one French company – SUEZ, by another

French company – Veolia. By virtue of its acquisition of the majority or totality of the shares of

SUEZ, Veolia will acquire most of the holdings of SUEZ, including its U.S. subsidiaries.9 As explained in Section II.E, above, SUEZ Water New York will become an indirect, majority-owned subsidiary of Veolia.

As discussed in Mr. Oldewurtel’s Testimony, Veolia has no immediate plans to change the operations, practices, or processes of SUEZ Water New York. All existing SUEZ Water New

York employees will be retained after consummation of the Transaction and for a period of at least one year thereafter, and all collective bargaining agreements in effect will be honored by Veolia.

At present, certain support services for SUEZ Water New York are provided by SUEZ Water

Management & Services, Inc. pursuant to an affiliate agreement between the companies entered into in 2016. In the same manner that Veolia’s acquisition of SUEZ will result in its acquisition of SUEZ Water New York, it will result in the acquisition of SUEZ Water Management &

Services, Inc. Further, there are presently in place a money pool agreement and an Affiliated

Sector Water Agreement between and among SUEZ Water New York and certain of its affiliates in other states. Veolia hereby commits to keeping all operations, practices, processes, employees, existing agreements, and provision of services in place following consummation of the Transaction and for a period of at least one year thereafter, except that Veolia reserves the right to make improvements for the benefit of customers as discussed herein or is otherwise identified as needed.

Veolia will notify the Commission, as appropriate, prior to making any material improvements.

9 Some SUEZ assets, mostly located outside of the United States, will be sold to the Consortium.

11 Moreover, Veolia will not seek to make any changes to the rate plan adopted by the

Commission last year during the term of the rate plan (i.e., through January 31, 2024).10

Importantly, all financial protections presently in place between SUEZ Water New York and other

SUEZ entities will continue without change, Veolia is willing to extend such protections as needed to include Veolia and its subsidiaries and affiliates. No costs associated with the closing

Transaction will be requested for recovery in rates by SUEZ Water New York customers.11

The combination of Veolia and SUEZ has the potential to yield improvements to their best practices, as well as deployment of new technologies. Upon consummation of the acquisition,

Veolia intends to review and assess SUEZ’s practices and institute improvements if and as warranted.12 Over time, it is possible that the merger of Veolia’s expertise with that of the SUEZ employees will lead to enhancements and new developments in procedures, processes, and equipment related to the provision of water services. If that occurs, and if such attributes can be applied to or for the benefit of the operations and customers of SUEZ Water New York, Veolia will do so. For example, PFOA/PFAS contamination of water supplies has become a significant issue in New York and around the world. Veolia is investigating technologies to treat water supplies to remove and possibly destroy the chemicals. The concept is to eliminate the chemicals to avoid perpetuating the existence of the compounds in the environment (air, soil, water). The effort underway includes research of existing and emerging technologies that can be deployed on

10 Cases 19-W-0168 and 19-W-0269, SUEZ Water New York, Inc. – Water Rates and Merger Approval, Order Adopting Terms of Joint Proposal Approving Merger, and Establishing Rate Plan (issued July 16, 2020) (“Merger Order”). 11 Petitioners will not seek to recover any costs associated with goodwill in rates. 12 At this time, Veolia has not identified any particular changes, but some information on potential improvements is provided in the attached Mr. Oldewurtel’s Testimony.

12 a water system to optimally remove the pollutants, as well as an evaluating of the capital and operating costs of the technologies.

SUEZ presently maintains a research and development facility in New York City. That facility is a knowledge center that tests water treatment for both municipal and industrial clients and develops technology solutions for drinking water supplies, treatment of drinking water and wastewater, and smart metering. Veolia provides innovative consultancy and other services to the

City of New York. Those services identify efficiency opportunities and implement improvements to their systems. While unrelated to SUEZ Water New York, Petitioners note this facility because of its New York location and its provision of benefits to New Yorkers, generally. This facility and its activities will remain in place post-Transaction.

Further, SUEZ and its subsidiaries support their local communities in many ways. Its employees provide tours and educational information on the significance of water resources, environmental habitats, and the interaction of water operations and activities with environmental considerations. It supports seasonal recreational events and programs, and sponsors a minor league baseball team and local community and environmental events, including reservoir and river cleanups, fairs, and festivals. Multiple members of the SUEZ management team sit on boards on local non-profit organizations. It sponsors scholarships to high school seniors and supports local community causes, food banks, and most recently, COVID relief.

Veolia has long had an equally strong commitment to supporting the communities in which it operates and in which its employees live and work. Through the Veolia Foundation and the

Veolia Environmental Trust, it sponsors community-oriented sustainability projects, provides emergency aid in response to natural disasters and humanitarian crises, offers job training, and supports environmental conservation programs. Accordingly, none of the current community-

13 related activities or community outreach and support in SUEZ Water New York’s service territories will change as a result of the Transaction.

V. THE PROPOSED FINANCING FOR THE TRANSACTION WILL NOT AFFECT WATER UTILITY CUSTOMERS

Veolia has annual world-wide revenues of over €26 billion ($31.2 billion). Post-closing, the combined revenues will be approximately €37 billion ($44.4 billion). The Transaction will be financed via a bridge loan entered into with a bank pool including Bank of America Europe DAC,

Credit Agricole Corporate and Investment Bank, HSBC Continental Europe, and Morgan Stanley

Europe SE. This loan will then be refinanced in part by the proceeds of the disposals required by the competition authorities and by hybrid bond issuances and the issuance of share capital securities or securities giving access to the share capital. The intent is to preserve a strong investment grade credit rating for Veolia and maintain the net financial debt/EBITDA ratio of the extended group below 3.0x in the medium term.

Veolia’s acquisition of SUEZ’s shares will occur at the ultimate parent level, and none of the Transaction-related costs will be allocated to SUEZ Water New York. Moreover, no assets and none of the stock of SUEZ Water New York will be pledged or used as collateral in the

Transaction or for any purpose by Veolia, Veolia North America, or any Veolia subsidiary or affiliate, and SUEZ Water New York will not act as a guarantor of any kind related to the

Transaction. Upon consummation of the Transaction, because SWR will remain the parent of

SUEZ Water New York and have the same level of access to the markets, there should be no change in SUEZ Water New York’s level of financial support from what it currently receives.

As noted previously, the financial protection mechanisms that are in place between SUEZ

Water New York and other SUEZ affiliates will remain in place. If the Commission determines that the existing protections should be extended to include Veolia, Veolia will commit to doing so

14 to protect SUEZ Water New York from any financial risks associated with Veolia and its other subsidiaries and affiliates.

VI. THE TRANSACTION IS IN THE PUBLIC INTEREST AND SHOULD BE APPROVED UNDER SECTION 89-H OF THE PUBLIC SERVICE LAW

Public Service Law § 89-h requires Commission approval for the acquisition of stock or bonds in a water-works corporation. The statute further provides that “[n]o consent shall be given by the commission to the acquisition of any stock in accordance with this section unless it shall have been shown that such acquisition is in the public interest.”13 Accordingly, the Commission will assess each proposed transfer on its own merits to ensure that it will serve the public interest and that there is a reasonable basis for adopting it.14 In making this determination, the Commission has considered factors such as whether the acquiring company is technically competent, managerially competent, and committed to the continued improvement of its water infrastructure.15

More recently, the Commission has held that the public interest standard may require the demonstration of positive benefits to customers.16

The Transaction satisfies the statutory requirement as interpreted by the Commission. The public interest analysis is centered on whether the transfer will enable the continued provision of

13 PSL § 89-h(5). 14 See e.g., Case 01-W-1770, Petition of Aquarion Company to Acquire all the Outstanding Common Stock of New-York American Water Company, Inc., Order Adopting Terms of Joint Proposal and Approving Stock Transfer (issued April 17, 2002) at 9 (“Aquarion Order”). 15 Id.; see also Cases 99-W-1542 and 94-W-0486, Joint Petition of United Water Resources, Inc. and Lyonnaise American Holding, Inc. for Approval of the Acquisition by Lyonnaise American Holding, Inc. of the Stock of United Water Resources, Inc. It Does Not Already Own, Order Approving Stock Acquisition (issued July 27, 2000) at 7-8 (“United Water Resources Order”) (noting the public interest standard is broad and can be satisfied via a demonstration that the transfer may offer “enormous technological and financial assets to help the subsidiary”). 16 See Section VI.C, infra.

15 safe, adequate, and reliable service for customers at just and reasonable rates, as required by PSL

§ 89-b(1). Given Veolia’s extensive experience in this industry, resources, and financial strength, customers will continue to receive safe, adequate, and reliable service. The rates set by the

Commission for SUEZ Water New York already have been determined to be just and reasonable and will continue to apply. In addition to these positive benefits, Veolia hereby commits to providing the customer benefits discussed below. The Transaction therefore satisfies the

Commission’s positive benefits standard.

A. Veolia Has Extensive Experience and Expertise In Water Management

Veolia is a world leader in water management and water technology services, supplying 95 million customers world-wide with drinking water. Upon consummation of the acquisition of

SUEZ and integration of its water experts, Veolia’s competence in this area will be unparalleled.

Veolia has tens of thousands of employees dedicated to operating water systems and conducting research and development activities on water conservation, water quality, purification, and other related matters. It has developed processes to improve operations, mitigate risks, enhance infrastructure, and contain operational costs.

Veolia and its subsidiaries also operate large water and wastewater systems across the

United States. For example, Veolia’s subsidiaries operate the Tampa Bay Water facility, which provides water services to a population of more than two million people, and the San Diego Border

Wastewater Project, which provides wastewater services to a population of more than one million people. Veolia has broad experience providing all aspects of water service, including maintaining and improving the operation and maintenance of a system, and all meter reading, billing, collection, and customer service functions.

16 In the United States, Veolia has made a substantial commitment (approximately $1.5 million) to the Great Lakes clean water initiatives, including research into the impact of pharmaceuticals on area watersheds. In 2010, Veolia was selected by the City of Buffalo to manage, operate, and maintain its water system and provide safe, high quality drinking water to over 280,000 people. Veolia maintains a system of more than 900 miles of pipes, two intake stations, two pump stations, and a filtration plant, producing more than 70 million gallons of clean drinking water every day. As part of its services, Veolia has introduced several new and innovative programs and performance metrics to improve customer service and reliability. Veolia automated the monitoring of the distribution network and treatment plant, improved customer service and

Call Center operations, implemented new asset management and maintenance programs, and developed a Process Control Management Plan to schedule and track preventative maintenance.

These improvements, along with a stellar operations and maintenance record, have helped Veolia gain recognition as a recipient of the American Water Works Association’s Diamond Pin Award.

B. Veolia Will Provide Multiple Benefits To New York Water Utility Customers

SUEZ Water New York and its customers will benefit from Veolia’s expertise and the best practices developed from combining the expertise and knowledge bases of Veolia and SUEZ. The potential exists – but must be studied – of employing similar systems put in place in Buffalo to the operations of SUEZ Water New York. As Veolia integrates the SUEZ entities, it will examine the potential for such improvements and, as appropriate, present proposals to do so for the

Commission’s consideration, either in a future rate case or a stand-alone petition.

In France, Veolia developed a state-of-the-art integrated management center that provides decision-making support for the continued provision of water supply, consumer safety, crisis prevention, and crisis management for the benefit of its customers. Veolia offers multichannel

17 systems for customers to communicate with it, including service centers, local and mobile branches, web portals, mobile applications for smartphones, and payment and social support platforms. Veolia will assess the potential for using similar multichannel systems to communicate with its SUEZ Water New York customers and improve customer service.

An example of such systems is Veolia’s Hubgrade Smart Digital Solutions, which combine real-time data, advanced analytics, and human expertise to create new opportunities to manage and optimize water systems. The system relies on cloud-based computing and the Internet of Things to capture and utilize granular data. To date, the system has improved the following processes: invoice processing, budgeting and financial reporting, optimizing operations and maintenance for facilities, managing sustainability projects and programs, managing regulatory and environmental compliance, enhancing security and safety on site, and facilitating business continuity by, among other things, preventing or minimizing equipment failures.

Veolia is committed to ensuring infrastructure resiliency to respond to the increasing risks of climate change. Veolia’s response to Hurricane Katrina provides an illustrative example of this commitment. Over the course of four months, Veolia dispatched thirty of its experts to New

Orleans to collaborate with stakeholders and study 200 drinking water, wastewater, and storm drainage facilities to evaluate their vulnerability and recommend resilience measures. This same ability to call upon experts and dispatch professional assistance will be available to SUEZ Water

New York customers, and Veolia is well-positioned and ready to help the State continue to prepare for and respond to the risks of climate change.

Veolia has the operational experience to ensure that there is no diminution of service to its

New York customers. It has no specific plans for improvements at this time, other than to continue the SUEZ Water New York capital plans that already are in place. Once the Transaction is

18 approved and consummated, Veolia will evaluate the operations of its U.S. water utilities and, as appropriate, employ new technologies and operational efficiencies to maintain adequate water resources, ensure the quality of the water provided to customers, and control costs.

As noted in Section V, above, Veolia is financially stable and creditworthy. In 2020,

Veolia’s revenues were close to €30 billion ($36 billion). After the acquisition, its annual revenues are projected to be approximately €37 billion ($44.4 billion). Veolia maintains a stable credit outlook of Baa1/Prime-2 from Moody’s Investors Services and BBB/A-2 from Standard & Poor’s.

It has ready access to the financial markets and will be able to support SUEZ Water New York’s capital and other financial needs. The strength of its balance sheet and credit ratings will continue to allow SUEZ Water New York to access capital at reasonable rates. The Commission previously has relied on financial stability as a rationale for approving a PSL § 89-h petition as within the public interest.17

As discussed in Section IV, above, Veolia will not make any personnel changes at SUEZ

Water New York for at least one year post-closing, and it will encourage the management and employees of SUEZ Water New York to continue the community activities currently undertaken without change. Veolia also will continue to provide financial and educational support to its local communities through SUEZ Water New York, and it will maintain the same overall presence in

New York that now exists, including continuing the important research and development efforts at the New York City knowledge center.

17 See Aquarion Order at 9-10; see also Case 06-W-1367, Joint Petition for a Declaratory Ruling Disclaiming Jurisdiction or, in the Alternative for Approval of the Merger of Gaz de France S.A. and Suez S.A., and the Simultaneous Initial Public Offering of Shares of Suez Environment, Order Authorizing Reorganization and Associated Transaction (June 25, 2008) at 6-7.

19 Further, Veolia recognizes the significant financial toll experienced by many customers as a result of the COVID pandemic. The moratorium on terminations and the imposition of late payment charges has helped over the short-term, but some customers will experience a significant impact once the moratorium is lifted and customer arrearages become due. Veolia will help to ease these financial impacts via a shareholder contribution to reduce these arrearages. Specifically,

Veolia proposes that its shareholders would contribute an amount equal to 20% of the total residential customers’ arrears that are more than 60 days overdue, measured as of the date of a

Commission Order approving the Transaction. Our goal is to target the SUEZ Water New York customers who have been most impacted by the COVID pandemic, particularly disadvantaged communities and low income residents. Petitioners will work with Department of Public Service

Staff on the best way to effectuate this relief.

Additionally, Veolia is aware of the increasing cost burdens on low income customers due to utility expenses. In its last rate proceeding, SUEZ Water New York agreed to take steps to identify its low income customers as a move toward implementing a low income discount program.18 Veolia proposes to work with Department of Public Service Staff and interested parties to accelerate this effort to help reduce these customers’ utility expenses.

C. The Commission Has Previously Approved Upstream Transactions Involving Similar Customer Benefits As Being In The Public Interest

In 2008, the Commission considered a similar upstream transaction – the merger of SUEZ and Gaz de France S.A. In that matter, like this matter, there were no significant synergy savings or operational benefits that would accrue to the benefit of SUEZ’s New York water customers.

However, there, as in this case, customer benefits included becoming part of a larger multinational

18 Cases 19-W-0168 and 19-W-0269, supra, Merger Order at 52-53 and Attachment A (Joint Proposal) at 39-40.

20 company that increased their access to technological innovations, best practices, and operating efficiencies. Customers also benefitted (there and here) from the utility’s continued access to the financial markets at reasonable rates.19 For these reasons, the Commission determined that the upstream merger there was in the public interest.20

In 1994, the Commission considered a similar upstream transaction – the merger of United

Water Resources, Inc. (“UWR”) and GWC Corporation (“GWC”). At that time, UWR was the holding company parent of the Spring Valley Water Company and GWC was the holding company parent of multiple water utility companies. GWC also was a wholly-owned subsidiary of a French company that later became SUEZ. The Commission pointed to the “pre-eminence” of GWC and its parent company in water utility operations, the increased access of the New York water utility to the financial markets, and future opportunities for efficiencies and economies of scale.21 As with the Transaction, another important factor was the absence of negative impacts on or changes to operations or management of the New York water utility.22 Petitioners respectfully submit that because the same benefits found to support the public interest finding in the earlier SUEZ mergers exist with the Transaction, the Commission should find that Veolia’s acquisition of SUEZ is in the public interest and approve the Transaction.

19 Moody’s Investors Service has recently rated the long-term debt of Veolia and SUEZ at Baa1, and Standard & Poor’s has rated the long-term debt of Veolia at BBB (SUEZ’s debt is not rated by Standard & Poor’s). Thus, the Transaction will not diminish SUEZ Water New York’s ability to access the financial markets as needed. 20 Case 06-W-1367, supra, Order Authorizing Reorganization and Associated Transactions (issued June 25, 2008). 21 Case 93-W-1040, Joint Petition of United Water Resources, Inc. and GWC Corporation for a Declaratory Ruling that the Commission lacks jurisdiction over any Transactions Relating to the Merger of GWC Corp. into United Water Resources; or, in the alternative, for approval of the Transactions, Order Asserting Jurisdiction and Granting Approval of the Merger (issued April 6, 1994). 22 Id.

21 Petitioners further submit that the Transaction satisfies the public interest standard that the

Commission has generally applied in merger proceedings. The Commission has held:

Once we have gauged the net benefits by comparing the transaction’s intrinsic benefits versus its detriments and risks, we can assess whether the achievement of net positive benefits requires that the intrinsic benefits be supplemented with monetized benefits (sometimes described as “positive benefit adjustments” or PBAs). Then, if necessary, we establish a quantified PBA requirement, “as an exercise of informed judgment because there is no mathematical formula on which to base such a decision.”23

As discussed above, the Transaction will result in benefits with no detriments or risk for

SUEZ Water New York’s customers. Thus, there can be no question that the Transaction will be a net positive event for customers. That there are no direct synergy savings to customers is inapposite; because of the totality of the positive benefits and lack of detriments, the Commission need not require positive benefit adjustments in order to find that the upstream acquisition of SUEZ by Veolia is in the public interest.

For the foregoing reasons, Petitioners respectfully request that the Commission find the acquisition of SUEZ by Veolia to be in the public interest and approve the Transaction by mid-

November 2021 pursuant to PSL § 89-h.

23 Case 12-M-0192, Joint Petition of Fortis, Inc. et al. and CH Energy Group, Inc. et al. for Approval of the Acquisition of CH Energy Group, Inc. by Fortis Inc. and Related Transactions, Order Authorizing Acquisition Subject to Conditions (issued June 26, 2013) at 59, citing Case 07-M-0906, Joint Petition of Iberdrola S.A., Energy East Corporation, RGS Energy Group, Inc., Green Acquisition Capital, Inc., New York State Electric & Gas Corporation and Rochester Gas & Electric Corporation for Approval of the Acquisition of Energy East Corporation by Iberdrola, S.A., Order Authorizing Acquisition Subject to Conditions (issued January 6, 2009) at 136. See also Cases 19-W-0168 and 19-W-0269, supra, Merger Order at 8 (citing to Case 07-M-0906).

22 VII. STATE ENVIRONMENTAL QUALITY REVIEW ACT

Under the State Environmental Quality Review Act (“SEQRA”)24 and its implementing regulations,25 the Commission must determine whether its action in this proceeding may have a significant impact on the environment. Because no additional state or local permits are required for the approval of the Transaction, the Commission may declare itself the SEQRA “lead agency” to conduct an environmental assessment and determine the significance of the proposed action.26

The proposed action – approval of the Transaction – does not meet the definition of a Type

I or Type II action and is therefore classified as an “unlisted” action requiring SEQRA review.27

To facilitate this assessment, the Petitioners have appended to this Petition as Attachment I an

Environmental Assessment Form for the proposed action.

Because the acquisition of SUEZ by Veolia will not result in any material changes in SUEZ

Water New York’s operations, activities, or provision of service to its customers, the Transaction will not create or lead to any environmental impacts within the meaning of SEQRA or its implementing regulations. Therefore, the Commission should determine that the Transaction will not have a significant impact on the environment, adopt a negative declaration pursuant to SEQRA, and undertake no further environmental review.28

VIII. OTHER APPROVALS

Through its acquisition of SUEZ, Veolia will acquire six other regulated water utilities within the United States that are indirect, majority-owned subsidiaries of SUEZ. They are SUEZ

24 Environmental Conservation Law Article 8. 25 6 NYCRR Part 617 and 16 NYCRR Part 7. 26 6 NYCRR § 617.6(b). 27 6 NYCRR §§ 617.4, 617.5, and 16 NYCRR § 7.2. 28 See 6 NYCRR § 617.7.

23 Water Delaware Inc., SUEZ Water Idaho Inc., SUEZ Water New Jersey Inc., SUEZ Water

Pennsylvania Inc., SUEZ Water Bethel Inc., and SUEZ Water Rhode Island Inc. In Idaho and

Rhode Island, no regulatory approval is required, but Veolia will provide notice of the Transaction to those States’ public utility commissions. In Delaware, New Jersey, and Pennsylvania, Veolia must obtain approval of its acquisition of SUEZ from each State’s public utility commission, similar to the approval sought herein. It is simultaneously filing petitions or applications with those commissions for such approvals.

Separately, Petitioners already have complied with the Hart-Scott-Rodino Antitrust

Improvements Act of 1976 by providing premerger notifications to the Federal Trade Commission and U.S. Department of Justice on March 23, 2021. The Department of Justice did not request the opportunity to review the Transaction, so by operation of law the Transaction was deemed to have cleared federal antitrust review as of April 6, 2021.

Veolia must obtain approval from the Federal Communications Commission (“FCC”) in connection with the transfer of radio licenses that SUEZ obtained through its acquisition of United

Water in July 2000. SUEZ discovered in 2020 that it inadvertently had not obtained the FCC’s approval for the transfer of the radio licenses originally issued to United Water. Accordingly,

SUEZ self-disclosed this matter to the FCC and reached a settlement with the FCC to resolve the investigation. On June 11, 2021, the FCC issued its Order adopting a consent decree and terminating the investigation. Petitioners plan to seek approval of the transfer of those licenses from SUEZ to Veolia.

Petitioners will submit a joint notice to the Committee on Foreign Investment in the United

States (“CFIUS”) and will fully cooperate with and respond to any requests for additional information received from CFIUS until CFIUS clearance is obtained.

24 Merger and competition approvals are required from the European Commission, the executive branch of the European Union. That approval is expected early in the fourth quarter of

2021, in accordance with Article 6.1(b) of the European Commission’s Regulation No. 139/2004 of January 20, 2004.

Petitioners are not aware of any other governmental consent or approvals required in the

United States to consummate the Transaction.

IX. NEW YORK STATE ADMINISTRATIVE PROCEDURE ACT

Pursuant to Section 202(1)(a) of the State Administrative Procedure Act, the Commission’s consideration of the Transaction is a rulemaking requiring notice published in the New York State

Register and a 60-day public comment period. A draft form of notification suitable for publication in the New York State Register is appended hereto as Attachment J.

X. REQUEST FOR TIMELY APPROVAL

Petitioners respectfully request the Commission process this Petition and approve the

Transaction on a basis that will allow for the closing to occur before the end of 2021. Such treatment is appropriate and necessary as the Transaction is in the public interest, there are no adverse risks or impacts to New York customers, and a protracted regulatory proceeding has the potential to jeopardize it. Specifically, Petitioners respectfully request that the Commission act on the Petition no later than its November 2021 session.

25 XI. SUPPORTING INFORMATION

The Commission’s regulations (16 NYCRR §§ 31.1 and 39.1) set forth the supporting information to be included in a petition under PSL § 89-h. In accordance with those regulations, and in support of this Petition and the expedited approval requested herein, Petitioners provide the following information.

16 NYCRR § 31.1(a). This regulation incorporates by reference the requirements of 16

NYCRR § 18.1(f)-(i) and (p), which regulations require the provision of information regarding

Petitioners’ financial condition, including details on bonds, mortgages, affiliate relationships, and balance sheets. SUEZ Water New York has no long-term debt. It has no bonds, mortgages, or other evidence of indebtedness. As of December 31, 2020, SUEZ had net debt in the amount of

€9.7 billion ($11.6 billion). Veolia has net financial debt in the amount of €13.5 billion ($16.2 billion). Income statements and balance sheets for 2020 for SUEZ Water New York are provided in Attachment K. Consolidated financial statements for SUEZ and Veolia are provided in

Attachments L and M, respectively.

16 NYCRR § 31.1(b). This regulation requires a description of the property to be transferred. As discussed herein, Veolia is acquiring the majority to all of the outstanding shares of SUEZ. Upon the closing, all of SUEZ’s U.S. assets will be owned by Veolia. Accordingly, all physical plant, systems, goodwill, other assets, liabilities, and all other rights and obligations of

SUEZ Water New York will be within Veolia’s ownership and control.

16 NYCRR § 31.1(c). This regulation requires a list of the franchises, consents and rights to be transferred. Because SUEZ Water New York will remain an operating water utility, none of the franchises, consents, or rights to operate that it possesses need to be or will be transferred.

26 16 NYCRR § 31.1(d). This regulation requires the provision of certified copies of municipal approvals needed to effectuate the transfer. As set forth above, no franchises or local consents are changing as a result of the Transaction and upstream acquisition by Veolia of SUEZ.

Therefore, no municipal approvals are needed.

16 NYCRR § 31.1(e). This regulation requires the provision of a copy of the Combination

Agreement between Veolia and SUEZ. It can be found in Attachment H.

16 NYCRR §§ 31.1(f) and (g). These regulations require the provision of an inventory and original cost of the property to be transferred, classified in accordance with the Uniform System of Accounts. As discussed above, the property of SUEZ Water New York will remain its property without change post-closing. Nevertheless, for completeness purposes, Petitioners provide the information required by these regulations in Attachment K.29

16 NYCRR § 31.1(h). This regulation requires an estimate of the accrued depreciation on the property shown in the above inventory, along with an explanation of the method used to calculate the estimate. For the same reason provided above, no property of the regulated water utility will be directly transferred, but the depreciation information is set forth in Attachment K.

The depreciation method used is the same method recently accepted by the Commission when it approved new rates for SUEZ Water New York in Case 19-W-0168.30

16 NYCRR § 31.1(i). This regulation requires the cost of the property to be transferred as shown on SUEZ Water New York’s balance sheet. The total net utility plant shown on SUEZ

29 See Case 19-W-0168, supra, Rate Case Exhibits of SUEZ Water New York’s Revenue Requirement Panel (filed March 4, 2019) at Schedule RRP-5 for additional details. 30 See Case 19-W-0168, supra, Testimony and Exhibits of John J. Spanos on behalf of SUEZ Water New York (filed March 4, 2019) for additional details.

27 Water New York’s consolidated balance sheet as of December 31, 2020 is $862,140,042. The total net right of use assets as of the same date equal $17,781,871. Details are provided in

Attachment K.

16 NYCRR § 31.1(j). This regulation requires details on the depreciation and amortization reserves applicable to SUEZ Water New York. That information can be found on the Income

Statement as of December 31, 2020 which is attached hereto in Attachment K.

16 NYCRR § 31.1(k). This regulation requires information of contributions in aid of construction. There are no contributions in aid of construction on the books of SUEZ Water New

York.

16 NYCRR § 31.1(l). This regulation requires the provision of a statement of operating revenues, expenses and taxes for the past three years plus the most recent balance sheets of SUEZ and Veolia. The information sought regarding SUEZ Water New York can be found in Attachment

K. The most recent consolidated financial statements of SUEZ and Veolia can be found in

Attachments L and M, respectively.

16 NYCRR § 39.1(a). This regulation requires the provision of details on the financial condition of Petitioners. This information can be found in Attachments K, L, and M.

16 NYCRR § 39.1(b). This regulation seeks the basis for the acquisition and the amount of stock already owned by Veolia. Veolia seeks to acquire SUEZ for the reasons set forth herein

– to remain competitive in the global marketplace, remain a global leader in water management, and leverage the combined expertise of the two companies to provide value for customers, communities, employees, and shareholders. At present, Veolia owns 29.9% of the shares of SUEZ.

16 NYCRR § 39.1(c). This regulation seeks information on the market value of the SUEZ shares to be purchased by Veolia, including the highest and lowest sale price during the prior three

28 years, dividend payments for the previous five years, and the price and terms of payment. The details of the Transaction can be found in the Combination Agreement. Veolia will make a tender offer to acquire the outstanding shares of SUEZ at a price of €20.50 ($24.60) per share. The present market value of the SUEZ shares to be purchased by Veolia is not known at this time and will not be known until the offer period closes later this year and the results of the offer are published by the AMF. Over the past three years, the highest share price is its current price of approximately €20 ($24). The lowest share price was €8.87 ($10.64) on March 29, 2020. Since

May 2016, SUEZ has paid five dividends – €0.65 ($0.78)/share on May 10, 2016, €0.65/share on

May 15, 2017, €0.65/share on May 22, 2018, €0.65/share on May 22, 2019, and €0.45

($0.54)/share on May 18, 2020.

16 NYCRR § 39.1(d). This regulation requires certified copies of all authorizations for the

Transactions received to date and the authorizations required to consummate the Transaction. The other approvals required for the Transaction are discussed in Section IX, above. No formal approvals have been issued at this time. As explained above, the antitrust clearance from the U.S.

Department of Justice occurred by operation of law.

29 XII. CONCLUSION

For all of the foregoing reasons, Petitioners respectfully request that the Commission find that Veolia’s acquisition of the majority to all of the outstanding shares of SUEZ is in the public interest and approve the Transaction pursuant to PSL § 89-h and grant such other and further relief as the Commission deems necessary and appropriate. Petitioners also respectfully request that the

Commission act expeditiously – no later than November 2021 – to allow the Transaction to close by the end of 2021.

Respectfully submitted,

Kevin M. Lang Brian T. Fitzgerald Kevin M. Lang, Esq. Brian T. FitzGerald, Esq. Amanda De Vito Trinsey, Esq. Gregory G. Nickson, Esq. Julie A. Yedowitz, Esq. Counsel for SUEZ S.A. Counsel for Veolia Environnement S.A. and SUEZ Water New York Inc. And Veolia North America, Inc. CULLEN AND DYKMAN LLP COUCH WHITE, LLP 80 State Street, Suite 900 540 Broadway Albany, New York 12207 P.O. Box 22222 518-788-9440 Albany, New York 12201 [email protected] 518-426-4600 [email protected] [email protected] [email protected] [email protected]

Dated: June 11, 2021 Albany, New York