FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs, which are used to measure fair value, are prioritized through the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 10. Fair Value to the Consolidated Financial Statements in our 2015 Form 10-K.

The following tables set forth by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2016, and December 31, 2015. Each asset and liability is classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of these assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of Cash and Cash Equivalents listed on the Consolidated Balance Sheet approximates the carrying amount and therefore is excluded from the recurring fair value measures in the following tables.



	Fair Value as of September 30, 2016
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities		$7.7	—		—			$7.7
Available-for-sale – Corporate and Governmental Debt Securities	—			$11.7	—		11.7
Cash Equivalents	2.0		—		—		2.0
Total Fair Value of Assets		$9.7		$11.7	—			$21.4

Liabilities (b)
Deferred Compensation	—			$16.0	—			$16.0
U.S. Water Services Contingent Consideration	—		—			$37.9	37.9
Total Fair Value of Liabilities	—			$16.0		$37.9		$53.9
Total Net Fair Value of Assets (Liabilities)		$9.7	$(4.3)		$(37.9)		$(32.5)


(a)	Included in Other Investments on the Consolidated Balance Sheet.


(b)	Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.

NOTE 5. FAIR VALUE (Continued)



	Fair Value as of December 31, 2015
Recurring Fair Value Measures	Level 1		Level 2		Level 3		Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities		$7.6	—		—			$7.6
Available-for-sale – Corporate Debt Securities	—			$10.9	—		10.9
Cash Equivalents	2.0		—		—		2.0
Total Fair Value of Assets		$9.6		$10.9	—			$20.5

Liabilities (b)
Deferred Compensation	—			$16.1	—			$16.1
U.S. Water Services Contingent Consideration	—		—			$36.6	36.6
Total Fair Value of Liabilities	—			$16.1		$36.6		$52.7
Total Net Fair Value of Assets (Liabilities)		$9.6	$(5.2)		$(36.6)		$(32.2)


(a)	Included in Other Investments on the Consolidated Balance Sheet.


(b)	Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.

The Level 3 liability in the preceding tables is the result of the February 2015 acquisition of U.S. Water Services. Changes in the U.S. Water Services Contingent Consideration can result from changes in discount rates, timing of milestones that trigger payment, and the timing and amount of earnings estimates. Changes in the fair value of U.S. Water Services’ Contingent Consideration for the nine months ended September 30, 2016, are primarily due to accretion expense. Management analyzes the fair value of the contingent liability on a quarterly basis and makes adjustments as appropriate.

For the nine months ended September 30, 2016, and the year ended December 31, 2015, there were no transfers in or out of Levels 1, 2 or 3.

Fair Value of Financial Instruments. With the exception of the item listed in the table below, the estimated fair value of all financial instruments approximates the carrying amount. The fair value for the item listed below was based on quoted market prices for the same or similar instruments (Level 2).



Financial Instruments	Carrying Amount	Fair Value
Millions
Long-Term Debt, Including Long-Term Debt Due Within One Year
September 30, 2016	$1,556.9	$1,721.8
December 31, 2015	$1,605.0	$1,676.0

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. Non-financial assets such as equity method investments, goodwill, intangible assets, and property, plant and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. For the nine months ended September 30, 2016, and the year ended December 31, 2015, there were no indicators of impairment for these non-financial assets.