Deregulation of the electric utility industry and more rigorous water quality regulations provide both an incentive and an operating need for water utilities to optimize daily operations. Water utilities understand that new computer-based tools are required to reduce the cost of pumping and treatment based on variable energy price schedules and quality of water. The American Water Works Association Research Foundation (AWWARF) anticipated this need and developed the concept of an Energy and Water Quality Management System (EWQMS). An EWQMS utilizes both software and operating staff to optimize water utility operations. Although an industry-wide collaborative approach was proposed by AWWARF researchers to reduce the cost of an EWQMS, it can still represent a significant investment of time and money. The first step a water utility should take when considering an EWQMS is to evaluate potential benefits, both tangible and intangible. Such an analysis will also assist in the development of the function requirements for an EWQMS. This paper provides a structured approach for the evaluation of EWQMS benefits. It is based on previous work with large and medium sized water utilities nationwide. The paper is divided into three parts: energy management; water quality management; and operations planning and scheduling. Includes 2 references, tables, figures.