American Water Works Company, Inc. (NYSE: AWK), the largest publicly traded U.S. water and wastewater utility company, today announced the financial close of its sale of regulated operations in Arizona and New Mexico to EPCOR USA. The agreement of sale was announced on January 24, 2011, at a purchase price of $470 million. The pre-tax gain on sale, prior to allocation of a portion of the goodwill from the parent company, is approximately $50 million. After allocation of the goodwill, the pre-tax gain and its impact on net income is expected to be minimal. The completion of the transaction was contingent upon regulatory approval in Arizona and New Mexico, both of which have been received.

"Today is the conclusion of months of work on the part of many of our employees," said Jeff Sterba, CEO of American Water. "This transaction allows American Water to continue to focus on areas where we can best serve customers and meet our objectives, and it allows our employees in Arizona and New Mexico new opportunities with EPCOR. I am pleased to celebrate this success and the conclusion of this process."

American Water serves approximately 174,000 customers in Arizona and New Mexico. American Water and EPCOR USA are committed to working together to ensure a smooth and seamless transition for customers as well as employees. Approximately 220 American Water employees based in Arizona and New Mexico will become EPCOR employees.

Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 15 million people in more than 30 states as well as parts of Canada. More information can be found at www.amwater.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are predictions based on our current expectations and assumptions regarding future events and relate to, among other things, the transition from American Water to EPCOR USA of our customers and employees in Arizona and New Mexico, our expected gain on the sale of our operations in Arizona and New Mexico, our future financial performance and our ability to meet our business objectives. Actual results could differ materially because of factors such as the impact of certain post-closing purchase price adjustments contained in the definitive agreement relating to the transaction; our ability to assist EPCOR USA with the transition of the businesses; decisions of governmental and regulatory bodies, including decisions to raise or lower rates; the timeliness of regulatory commissions' actions concerning rates; changes in laws, governmental regulations and policies, including environmental, health and water quality and public utility regulations and policies; weather conditions, patterns or events, including drought or abnormally high rainfall; changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts; our ability to appropriately maintain current infrastructure and manage the expansion of our business; our ability to obtain permits for projects; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations; our ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our operations; our ability to successfully acquire and integrate water and wastewater systems that are complementary to our operations and the growth of our business; cost overruns relating to improvements or the expansion of our operations; changes in general economic, business and financial market conditions; significant changes to our business processes and corresponding technology; access to sufficient capital on satisfactory terms; fluctuations in interest rates; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; fluctuations in the value of benefit plan assets and liabilities that could increase our cost and funding requirements; the incurrence of impairment charges; migration of customers into or out of our service territories; difficulty in obtaining insurance at acceptable rates and on acceptable terms and conditions; ability to retain and attract qualified employees; and civil disturbance, labor strikes or terrorist threats or acts or public apprehension about future disturbances or terrorist threats or acts.

For further information regarding risks and uncertainties associated with American Water's business, please refer to American Water's annual, quarterly and periodic SEC filings. The Company undertakes no duty to update any forward-looking statement.

American Water Works Company, Inc.
Edward Vallejo
Vice President, Investor Relations
856-566-4005
edward.vallejo@amwater.com
or
Maureen Duffy
Vice President, Communications
856-309-4546
maureen.duffy@amwater.com