AMER0838_CR Report 2010_8_23 - American Water

Corporate 

Responsibility 

Report 2010 

A unique perspective on the new water reality 

Corporate responsibility report 2010 1

Our vision is to be the trusted steward 

of your precious resource—water. 

American Water has provided customers with high-quality water and 

wastewater service for over 125 years. At a time when the water 

industry is facing ever more demanding challenges, that depth of 

experience has never been more important. Amid mounting concern 

over the future of our nation’s water supply, American Water is 

engaging with our customers and our communities, investing in new 

and innovative solutions, and working with our stakeholders in order 

to achieve our vision. We know that water is an essential resource— 

and we don’t take it for granted. Every day our team of more than 

7,000 professionals focus on helping to ensure the long-term 

reliability of your water services. 

Cover photo: Margaret DiGenova, California American Water 


Table of Contents 

3–20 OUR COMPANY 

4–8 Who We Are 

9 CEO Message 

10–12 Governance and Ethics 

13–16 Integration of Corporate 

Responsibility 

17–20 New Water Realities 

21–41 OUR PRIORITY 

22–24 Integrated Water Resource 

Management 

25–26 Energy and Water 

27–29 Engaging with Customers 

and Communities 

30–34 Access and Affordability 

35–37 Managing Risks 

38–39 Innovation 

40–41 Public Policy 

42–66 OUR PERFORMANCE 

43–44 Ethical Performance 

45–50 Water Management Performance 

51–54 Environmental Performance 

55–59 Workplace Performance 

60–61 Our Customers 

62–63 Supply Chain Performance 

64–66 Case Studies 

67–72 METRICS 


Our Company 

The largest publicly traded U.S. water 

and wastewater utility company 

At American Water, with our combination of size, geographic spread, 

diverse technological ability and depth of experience, we are well 

positioned to address challenging new water realities. Additionally, 

because our operations are fully integrated into the communities we 

serve, we understand and respond to local needs. Our commitment 

to delivering high-quality water and wastewater service puts us at 

the forefront of research, developing new solutions such as water 

reuse and desalination to help ensure a sustainable water future for 

our customers. 


who we are 

American Water Operations 

Minnesota 

Wisconsin 

Massachusetts 

Colorado 

Arkansas 

Manitoba and Ontario, Canada 

On the American Water team, you’ll find the top solutions providers in the industry: scientists, engineers and 

technicians all coming together for one purpose—to provide high-quality water and wastewater service. 


who we are 

American Water By the Numbers 

As we continue to invest in the necessary infrastructure to serve our customers and communities we 

are increasingly using technologies that make more efficient use of water resources. 

1.4 BILLION 

gallons of water treated and delivered per day 

600 

groundwater treatment plants 

15 

million people provided with high-quality 

service each year 

64 

wastewater treatment facilities 

7,000 

employees focused on water service 

49,000 

miles of distribution and 

collection mains 

$2,710.7 MILLION 

in total operating revenue 

$748.1 MILLION 

in operating income 

90 

surface water treatment plants 

2 

operating segments: our regulated businesses 

and our market-based businesses 


Who we are 

We care about water. 

It’s what we do. ® 

More than 

15 MILLION 

people served 

every day 

Craig Evans, California American Water 

ABOUT AMERICAN WATER 

American Water is the largest investor-owned water and wastewater company in the United States. Headquartered 

in Voorhees, NJ, we currently operate in more than 30 states and Manitoba and Ontario, Canada. American Water 

operates as regulated utilities in 20 states, providing water and wastewater services to residential, commercial 

and industrial customers. In these operations we follow regulations that are set by local authorities, as well as 

federal standards established by the United States Environmental Protection Agency (EPA). In 2010, we achieved 

a score of greater than a 99.9 percent for drinking water compliance—a fact that we are immensely proud of— 

and, according to EPA statistics, American Water’s performance has been far better than the industry average 

over the last several years. 


who we are 

We also provide services through market-based businesses including: 

Contract Operations Group, which enters 

into contracts to operate and maintain 

water facilities for the U.S. military, 

municipalities, the food and beverage 

industry and other customers. 

Homeowner Services Group, which 

provides services to domestic 

homeowners and smaller commercial 

establishments to protect against the cost 

of repairing broken or leaking water pipes 

and clogged or blocked sewer pipes inside 

and outside their accommodations. 

Terratec Environmental Ltd., which we 

refer to as Terratec, primarily provides 

biosolids management, transport and 

disposal services to municipal and 

industrial customers. 

In all our areas of operations we 

participate in community programs 

and invest in the infrastructure that 

is needed for reliable, consistent and 

high-quality service. 

Each year, at our Central Laboratory, and at our 

local utility labs, we conduct nearly one million 

tests and measurements using the most advanced 

technology and equipment available. 

AWARDS 

In the past several years, throughout our service territories, we have received more than 150 awards for water quality from state regulators, 

industry organizations, individual communities, and government and environmental agencies. 

A few award highlights in 2010 include: 

EPA Directors Awards – 24 plants received 

awards for achievement in water standards 

National Association of Water Companies 

Management Innovation Award 

National Council for Public-Private 

Partnerships 

Our teams of dedicated employees across the country work hard every day to 

provide high-quality water and wastewater services to our customers. 


who we are 

AMERICAN WATER TIMELINE 

1886 

American Water Works and Guarantee 

Company is established 

James S. Kuhn and his brother W.S. Kuhn 

organize one of the first public utility 

holding companies. 

1937 

Breaking ground for the future 

American Water Works and Electric Company 

is the first holding company in the country 

to submit a plan for reorganization to the 

Securities and Exchange Commission (SEC). 

1947 

In good company 

The SEC authorizes American Water Works 

and Electric Company to continue with 

its reorganization. A deadline is set for 

bids for the common stock of the new 

American Water Works Company. 

A legend is born 

John H. Ware, Jr. pulls off a financial coup 

as the sole bidder, with his Northeastern 

Water Company, for controlling interest in 

American Water Works Company. 

1950 

Revenues and shares 

American Water total revenues reach $26.3 

million. The market price of a common share 

of American Water stock is $1.19. 

1965 

Reaching the million milestone 

American Water buys the water properties 

of the Southern Gas & Water Company 

in West Virginia, thereby expanding the 

customer base to more than 1 million for 

the first time. 

1970 

Consolidating companies 

In its first major consolidation, 

American Water combines 12 operating 

companies in New Jersey, creating the New 

Jersey Water Company. Willard Myers Ware, 

the younger son of John Ware II, is named 

vice chairman. 

1996 

Making history through construction 

The largest single construction project in 

American Water’s history is completed 

when New Jersey American Water’s $200 

million Delaware River Regional Water Supply 

project is placed in service. 

2002 

Game on 

Applied Water Management Group, an 

American Water subsidiary, begins a design/ 

build/operate project at Gillette Stadium 

in Foxborough, Massachusetts, that will 

produce high-quality reuse water for the 

stadium’s nearly 69,000 fans during peak 

halftime flush periods. 

2003 

High standards 

The Solaire, billed as “America’s first 

environmentally responsible residential 

tower,” is completed. American Water 

designed, built and operates the wastewater 

recycling system at the building’s core. Work 

begins on the largest design/build/operate 

project in North America at the time—a 

public-private partnership with the city of 

Phoenix to create the Lake Pleasant Water 

Treatment Plant. 

2004 

A fresh solution 

American Water, through a joint partnership 

with Acciona Agua, is brought in to provide 

solutions for the Tampa Bay Seawater 

Desalination Plant. 

2008 

A first for American Water and our industry 

On April 23, American Water offers the first 

of three tranches to divest from RWE Group 

in the largest utility initial public offering 

(IPO) in U.S. history. A year later, with the 

offering of the third of three tranches, 

RWE is fully divested and in November 

2009, American Water is 100 percent 

publicly traded. 

2009 

100 percent water reuse 

Work is completed on the Fillmore Water 

Recycling Plant, a design/build/operate 

project in Fillmore, California. The $42 

million wastewater treatment plant reuses all 

the water it treats for the irrigation of green 

spaces throughout the city of Fillmore. 

2010 

Leadership for the future 

Jeff Sterba becomes president and chief 

executive officer of American Water, the 

largest publicly traded water and wastewater 

services provider in the nation. 

2011 

125 years is just the beginning 

As we enter our 125th year of service, we 

are proud to serve approximately 15 million 

people in more than 30 U.S. states and two 

Canadian provinces. We are an American 

Tradition and eager to write the next 125 

years of our history. 


CEO MESSAGE 

“Our vision is simple—To be the trusted 

steward of your precious resource: water.” 

Celebrating 

125 

years of service 

in 2011 

Dear Readers, 

It is with great pleasure that I welcome you to our 2010 Corporate 

Responsibility Report at a time when American Water celebrates its 

125 th anniversary. This milestone is an opportunity to reflect on past 

successes as we prepare the company to deliver what we aspire to 

achieve. Our consistent ability to ensure the quality and reliability of the 

services we provide gives us a strong foundation to build upon—but it 

will be our capacity to innovate that will drive our future. 

Today, our nation’s massive water 

infrastructure, including a network of pipes 

spanning 700,000 miles, is in dire need 

of replacement and repair. While upgrading 

this system is costly, the consequences 

of delaying infrastructure investments 

put the quality of our nation’s water and 

wastewater services at serious risk. 

Growing populations in areas facing limited 

water supply, aging pipes and antiquated 

wastewater systems all factor into the 

EPA estimate that it will cost upwards of 

$1 trillion over the next 20 years to replace 

and repair our water and wastewater 

infrastructures. 

Responding to these and other challenges 

such as increasing demand on a finite 

amount of source water will determine 

our continued success in delivering our 

mission to provide safe, reliable water and 

wastewater services to our customers. 

It means creating new solutions for 

the communities we serve. It means 

strategically directing our business to 

ensure we operate in areas where we can 

best apply our technology and expertise. 

And it means investing in our people and 

our partnerships with the communities we 

serve. All of this is within our reach. 

We are investing significant capital— 

between $800 million and $1 billion in 

each of the last three years—as part of our 

commitment to strengthening our nation’s 

infrastructure. In 2010, this included 

several large infrastructure projects in New 

Jersey, Pennsylvania and Indiana to help 

ensure we can deliver long-term reliable 

service. In Kentucky, we put into place a 

new $164 million water treatment plant 

and pipeline to help ensure adequate 

water supply to that region, which has 

been severely challenged by drought and 

increased demand for a number of years. 

We are increasingly using technologies 

that make more efficient use of our 

scarce water resources. In New York 

City, American Water designed, managed 

construction of, and now operates the 

water reuse systems for five “green” highrise 

condominiums, which together save 

approximately 56 million gallons of water 

per year. In California, American Water’s 

partnership with the city of Fillmore won 

top honors from the National Council for 

Public-Private Partnerships for designing, 

building, and now operating the city’s 

new state-of-the-art, zero-discharge water 

recycling plant. This plant provides 1 

million gallons of treated water per day for 

irrigation and groundwater recharge. 

We also continue to review our business 

direction and growth to help ensure we 

are operating in areas where we are best 

positioned to provide high-quality service 

to customers and meet our business 

objectives. Our strategic decisions are 

guided by creating value—specifically, 

by investing capital where we can drive 

operational excellence and leverage the 

strength of our larger operations. A prime 

example of this is the recent decisions 

we made to divest of operations in Arizona, 

New Mexico and Texas as we acquire 

systems in Missouri. 

As we prepare for the future, it is critical 

that we continue to invest in our people. 

Our employees are the key to addressing 

water challenges of the future and 

delivering strong business performance. 

By investing in their careers, talents and 

capabilities, we enable them to innovate, 

to deliver high-quality service to our 

customers, and to make the kinds of 

connections that are necessary for us to 

reach our vision “to be the trusted steward 

of your most precious resource: water.” 

This report is part of continuing to build 

that trust. In it, we describe our priorities, 

our policies and approaches, and report 

on our performance. We thank you for 

your interest and invite you to share your 

concerns, opinions and ideas. 

One hundred and twenty-five years ago 

our predecessors created a company to 

meet the water challenges of a growing 

nation. We are determined to continue 

that tradition and we will continue to share 

progress with you in this report. 

Jeff Sterba 

President and Chief Executive Officer 


perspective on: governance and ethics 

Fostering a culture of integrity 

and accountability. 

We employ 

more than 

7,000 

professionals 

Water may be a basic need, but supplying 

quality water to homes and businesses 

around the clock is a complex process that 

requires treatment plants, miles of pipeline, 

experienced professionals and an unwavering 

commitment to exceptional service. 

Good Governance Fosters Trust 

Our business depends on trust. Our customers trust us to provide the highest quality water and wastewater 

services; the communities where we operate trust us to be a good corporate citizen; our employees trust us 

to create a collaborative, honest and innovative work environment; and our shareholders trust us to create 

value. Strong governance processes enable us to build that trust and help us to foster a culture of integrity 

and accountability. 

At American Water, we are committed to maintaining and bolstering a strong framework of rules and practices 

that govern corporate decision-making. Our philosophy toward good governance is broad—merging strong 

attention to our fiduciary and regulatory responsibilities with a commitment to positively managing our 

impacts on all stakeholders. 



Our Board of Directors 

The American Water board of directors is committed to working closely with management and providing 

independent oversight in order to: 

Adhere to stringent environmental 

standards that protect the integrity 

of customers’ drinking water and 

wastewater services 

Create a respectful and 

engaging work environment 

for employees 

Ensure that American Water 

achieves its operational and 

financial goals and delivers 

value to its customers and 

shareholders 

The board is guided by our Corporate 

Governance Guidelines, which, together 

with our Code of Ethics and the Charters 

of our Board Standing Committees, serve 

as the backbone for good corporate 

governance at American Water. 

The board selects and monitors senior 

management and provides oversight of 

financial reporting, risk management, legal 

compliance and corporate responsibility. 

Together with senior management, the 

board establishes operating principles 

and policies designed to promote the 

highest standards of ethics, integrity 

and compliance. 

The American Water board of directors 

addresses significant business issues 

collectively and through four committees: 

Audit Committee, Compensation 

Committee, Nominating/Corporate 

Governance Committee and Finance 

Committee. The board is responsible for 

nominating directors, with the assistance 

of the independent Nominating/Corporate 

Governance Committee. In nominating 

directors, the board’s objective is to select 

individuals with the skills and experience 

necessary to discharge fiduciary duties 

and assist management in strategically 

directing the company’s business. 

Board Independence and Evaluation 

Our board is led by an independent 

chairman, and seven of our eight board 

members are independent. Our company’s 

Corporate Governance Guidelines state 

that a majority of the board will be 

independent, as defined by New York Stock 

Exchange Listed Company rules. These 

rules also provide that no director can 

qualify as independent unless the board 

affirmatively determines that the director 

has no material relationship with the listed 

company. American Water’s standards in 

determining whether or not a director has 

a material relationship with the company 

are contained in our Corporate Governance 

Guidelines. 

Each year, American Water’s Nominating/ 

Corporate Governance Committee 

coordinates an evaluation of each director, 

the chairman, the board as a whole, and 

its committees to determine whether they 

are functioning effectively. The process 

considers the extent to which board 

members are meeting objectives and 

goals, including specific objectives related 

to corporate responsibility and business 

ethics. American Water’s Compensation 

Committee establishes policies, principles 

and procedures for the evaluation of 

our CEO. 

OUR CODE OF ETHICS 

Our Code of Ethics is our primary guidance 

document and includes some of our 

most important policies and standards 

for American Water employees. The 

Code sets out basic principles of ethical 

conduct and establishes guidelines to 

assist employees in adhering to these 

principles. Although the Code does not 

cover all ethical or legal situations, it does 

provide clear guidelines on responsible 

courses of action for matters such as 

avoiding conflicts of interest, dealing fairly 

with customers and other stakeholders, 

handling sensitive information, conducting 

oneself appropriately in the workplace, 

and others. 

The Code of Ethics is designed to promote 

honest and ethical conduct, and provides 

channels for the prompt internal reporting 

of violations to an appropriate person. 

American Water employees are expected 

to complete training on the Code of Ethics 

on an annual basis as well as during new 

employee orientation. 

Business Values 

American Water’s business strategy is 

guided by our Vision, Mission and Values. 

They direct the way we execute our 

business objectives, shape our behavior, 

and they differentiate us as a company. 

Ultimately our business values strengthen 

customer relationships and business 

success. We consider them the building 

blocks for success. 

Our vision is to be the trusted steward 

of your precious resource: water. 

Corporate responsibility report 2010 11 

AMERICAN WATER 10


AMERICAN WATER MISSION AND VALUES 

Our Mission: Live the Principle of Value > Price > Cost By: 

- Providing safe and reliable water service to our customers 

and the communities we serve 

- Driving operational excellence 

- Enabling employees to innovate and accomplish 

extraordinary things 

- Ensuring long-term stewardship of the resources we use 

or impact 

- Engaging customers, regulators and other stakeholders on 

critical water issues 

- Earning a fair return for our shareholders 

Our Values 

Honesty and Integrity 

- Demonstrate truthfulness and courage 

- Doing the right thing, regardless of the challenge 

- Open and direct conversation and we do what we say 

Communication 

- Communicate frequently and convey messages clearly 

- Listen actively to ensure understanding 

- Assess spoken and unspoken communication and respond with sensitivity, empathy 

and directness 

- Select the right communication vehicle for the audience and the situation 

Teamwork 

Excellence 

- Promote and support a diverse, unified team 

- Work together to meet common goals, holding each other accountable and challenging each 

other to reach the best decisions 

- Commit to decision once issues have been resolved 

- Being the best while balancing cost and value 

- Drive high performance that gets meaningful results 

- Continuous improvement, prioritizing safety and always showing respect for each other 

Engagement 

- Actively engage our American Water community 

- Approach challenges with a winning attitude, motivating ourselves and others to achieve 

our mission 


perspective on: governance integration of and corporate ethics responsibility 

Our commitment to corporate 

responsibility runs deep. 

Corporate Responsibility 

Executive Leadership 

Council formed in 

2008 

Dillard Griffin, Kentucky American Water 

ALIGNING BUSINESS STRATEGY WITH CORPORATE RESPONSIBILITY 

American Water was founded on a responsible and sustainable approach to business. As a provider of 

water and wastewater services to our customers, having a corporate management approach oriented toward 

corporate responsibility is key to our long-term success and our ability to build trust with our stakeholders. 

Our approach to corporate responsibility begins with our core business priorities: providing safe and reliable 

drinking water; advancing innovation in water treatment and delivery; helping to ensure the health of our 

communities; and demonstrating the highest ethical business standards. 



We continue to deepen the integration 

of responsible practices into our overall 

business operations and our decisionmaking 

processes. As part of this 

integration, the company established 

a Corporate Responsibility Executive 

Leadership Council in 2008. The Council, 

consisting of the company’s senior-level 

executives, provides strategic direction 

and support for American Water’s overall 

corporate responsibility integration. The 

Council also regularly reviews and approves 

of corporate responsibility-related policies, 

plans and goals. 

Additionally, our Corporate Responsibility 

Steering Committee, made up of 

representatives from a range of business 

functions, provides critical input toward 

the execution of corporate responsibility 

goals. The Steering Committee supports 

the development of corporate responsibility 

strategy and management systems, guides 

the development of policies and processes, 

sets performance measures, reviews 

progress, and recommends action. 

Critical focus areas for the Corporate 

Responsibility Executive Leadership Council 

and the Corporate Responsibility Steering 

Committee during 2010 included: 

• Reviewing and updating our Materiality 

Analysis for Corporate Responsibility 

• Reviewing our approach to human rights 

and how it impacts our operations 

• Creating our advisory Stakeholder 

Council 

• Overseeing our Corporate 

Responsibility report 

Stakeholder Engagement 

At American Water, we are engaged with a 

full range of our stakeholders every day. 

Understanding our stakeholders’ needs 

and perspectives helps guide our business 

strategy and decision making. We engage 

with our stakeholders through a variety 

of channels in order to learn about their 

expectations. This helps us shape our 

approach to corporate responsibility. 

The chart on the next page provides a 

summary of the different ways in which 

we engage with priority stakeholder 

groups. More detailed descriptions of 

our approach to stakeholder engagement 

and the decisions we have made based 

on stakeholder feedback can be found in 

specific sections throughout the report. 

Since 2009, we have developed a more 

deliberate approach to engaging with 

our stakeholders, regularly reviewing our 

relationships, engaging more formally with 

stakeholders related to our core business, 

and integrating feedback into our decisionmaking 

processes. For example, we 

regularly assess significant corporate 

responsibility risks and opportunities 

through a materiality process that involves 

stakeholder interviews to understand their 

perspectives and viewpoints. The results 

of this analysis influence how we report on 

our corporate responsibility performance 

and help to determine our priorities. 

American Water Stakeholder Council 

Additionally, in order to expand 

our understanding of our risks and 

opportunities related to corporate 

responsibility issues, we took steps to 

establish a formal stakeholder council 

in 2010. Our first meeting will be held in 

2011. This council, made up of esteemed 

experts in the fields of water and corporate 

sustainability, will meet on a regular 

basis to provide input to senior leaders 

at American Water, particularly related 

to the role of investor-owned utilities 

in addressing the water infrastructure 

challenge in the U.S. and responsible 

stewardship of water resources. 

By fully integrating corporate responsibility into our business approach, we 

strengthen our competitiveness. 



Stakeholder 

Customers and communities 

Employees 

Shareholders 

Suppliers and business partners 

Summary of How We Engage 

In-person service calls and water audits; town hall meetings; open houses; educational 

events; on-line communication including social media; Comprehensive Planning Studies; 

community grant-making activities. 

One-on-one meetings with managers; orientations; performance reviews; periodic tailgate 

and office meetings; informal employee meetings; corporate intranet site; periodic online 

newsletters; the Change Partner Network, a cross-functional group that meets monthly to 

learn about and then communicate about internal campaigns and news. 

Annual meetings; special investor meetings; email and on-line communication; events through 

our Investor Relations team. 

One-on-one meetings; through organizations and committees focused on supplier diversity 

opportunities; networking events 

NGOs 

Ongoing engagement to support local and national NGOs focused on local conservation, 

environmental stewardship, water-issue advocacy. 

Policymakers 

Ongoing engagement with state and city policymakers; local community meetings; NewsDrop, 

a regular newsletter for policymakers; participation in policymaking forums including 

Congressional forums and the U.S. Conference of Mayors; participation in industry associations 

including National Association of Water Companies and American Water Works Association. 

Water experts and scientists 

Memberships and associations 

Ongoing engagement with academics, researchers and other companies through advisory 

boards, industry organizations, conferences and special partnerships to address water industry 

challenges. Ongoing engagement through membership in the EPA’s WaterSense ® Program and 

Partnership for Safe Water. 

American Water is a member of numerous organizations at the local, state, regional and 

national level including: 

- Mayor’s Water Council 

- Association of Metropolitan Water Agencies 

- National Association of Water Companies 

- Business for Social Responsibility 

- Boston College Center for Corporate Citizenship 

- American Water Works Association 

- Water Research Foundation 

- WateReuse Research Foundation 

- Water Environment Research Foundation 

- Water Innovations Alliance 

RESPECTING HUMAN RIGHTS 

American Water is in the process of 

studying the issue of the human right to 

water and determining an appropriate 

approach. While respecting human rights 

is the responsibility of every employee 

at American Water, we recognize that our 

ability to manage our human rights impact 

requires strong oversight and governance. 

American Water has identified three 

key areas of human rights that our 

company impacts: 

• the right to reliable water and sanitation 

services at a reasonable cost 

• human rights in the workplace 

• human rights in the supply chain 

We will look for practical ways to support 

human rights and work to promote them 

where possible across our operations. 

We also expect our suppliers and 

business partners to demonstrate similar 

commitments to human rights. Regular 

engagement in our communities and with 

our stakeholders has helped us better 

understand our human rights impacts. We 

commit to continuing this dialogue. 



ADDRESSING MATERIAL ISSUES 

Regularly reviewing our most significant 

issues through a materiality analysis 

is a key part of integrating corporate 

responsibility into our business. By 

identifying the corporate responsibility 

issues that are most material—that is, 

most relevant—to our business, we ensure 

that we are focusing on areas where we 

have the most significant impact and that 

are of highest concern to our stakeholders. 

In 2008, American Water introduced a 

formal materiality analysis to identify the 

most relevant corporate responsibility 

issues to our business and to our 

stakeholders. During the process, we 

engaged with a set of our key stakeholders 

to understand their perspectives on priority 

issues for American Water. The results of 

the analysis further underscore that our 

core business responsibility to manage 

water resources, ensure access at prices 

that are fair and reasonable, address 

future water challenges, and continuously 

engage with the communities we serve 

to develop long-term sustainability 

solutions are the most material corporate 

responsibility issues for American Water. 

Since 2008, we have updated the analysis 

on a yearly basis. 

The materiality analysis informs our 

corporate responsibility strategy and 

determines how we report on our 

performance. The section, “Our Priority— 

Your Water” provides an overview of 

our most material issues and the 

procedures we have put in place to 

manage these issues. 

MATERIALITY ANALYSIS OUTPUT 

IMPORTANCE TO STAKEHOLDERS 

IMPORTANCE TO AMERICAN WATER 

Issues of High Priority 

- Integrated Water Resource Management 

- Energy and Water 

- Engaging with Customers and Communities 

- Access and Affordability 

- Managing Risks 

- Public Policy 

- Ethics 

Additional Issues of Importance 

- Compensation & Benefits 

- Employee Health & Safety 

- Enterprise Risk Management 

- Responsible Sourcing 

- Supplier Diversity 

- Training & Development 

- Waste Management 

- Workforce Diversity & Engagement 


perspective on: governance new water realities and ethics 

Our business 

depends today and for on the trust. future. 

Meeting water challenges 

More than 

$1 TRILLION 

is needed for America’s 

water infrastructure 

We actively work with our consumers and our 

communities through educational events, free 

home water audits, tours and open houses 

to help raise awareness of water issues and 

promote smart and efficient water use. 

Preparing for Future Demands 

Clean water is one of our most precious natural resources—essential for human life, and critical to the well 

being of both our economy and our natural environment. Despite the fact that access to clean water is 

often taken for granted in the developed nations, it is poised to be one of our great global challenges for the 

21 st century. 

According to the EPA, water scarcity, which is already a concern in some regions in the U.S., will increase in the 

future due to population growth, economic development, industrial and agricultural production, the intrusion 

of saltwater into our drinking water aquifers, and many other factors. Our ability to meet the existing and 

future water demands of our customers depends on an adequate supply of water—and we employ a variety of 

measures described throughout this report to ensure we can meet long-term needs. Our case studies provide 

examples of solutions we have put in place in areas of operations that are at risk of water scarcity. 

Due to future trends impacting water supply, the water industry must focus on long-term solutions involving all 

of our stakeholders in order to manage our water resources efficiently. We foresee the following interrelated 

challenges for the water industry: changing patterns of supply and demand in some areas, infrastructure needs 

and climate variability. The following sections briefly discuss these three challenges. To learn more about how 

American Water is actively addressing these and other challenges, see the “Our Priority—Your Water” section. 


perspective on: governance new water realities and ethics 

CHANGING PATTERNS OF SUPPLY AND DEMAND IN SOME U.S. REGIONS 

The U.S. is the only industrialized nation 

whose population is growing significantly. 

Whereas the population of Europe is 

expected to decrease by 10 percent by 

2050, that of the U.S. is expected to 

increase by nearly 50 percent from 2000 

levels. The population is growing fastest 

in areas where water is scarcest. This 

growing population will place new demands 

on increasingly scarce water resources— 

resources that are already impacted 

by other issues such as pollution and 

inefficient usage. 

According to the EPA, as many as 36 states 

may experience water shortages in the next 

five years, even in the absence of drought. 

For example, the West and Southwest have 

experienced rapid population growth and 

depend heavily on limited groundwater and 

surface water supplies. States surrounding 

the Great Lakes are already heavily 

populated and will continue to grow. The 

Southeast is experiencing rapidly increasing 

population—especially in coastal areas. 

It is clear that in order to meet demand 

for scarce resources, the water industry 

must find new sources of supply to increase 

capacity while remaining environmentally 

sensitive. 

Ironically, while increasing population may 

result in increased demand in certain 

areas, systemwide, American Water 

has experienced decreasing per capita 

consumption over an extended period of 

time. A number of factors contribute to 

this phenomenon, such as stricter building 

codes, more efficient appliances and 

fixtures, more constrained water supplies 

and the needs of environmental and habitat 

protection, an increasing conservation 

ethic, decreasing average household size, 

and others. The result is that in some areas 

the financial stability of the utility can be 

jeopardized as consumption and revenues 

decrease but fixed costs and the need 

to comply with increasing water quality 

standards and provide for infrastructure 

replacement remain. 

At American Water, we have a critical 

role to play in balancing the challenge 

of increased demand and decreasing 

per capita consumption by encouraging 

smart and efficient water use while at the 

same time pursuing regulatory policies 

that preserve the financial integrity of the 

utility to ensure fixed-cost recovery. We 

actively work with our consumers and our 

communities through educational events, 

free home water audits, tours and open 

houses to help raise awareness of water 

issues and promote smart and efficient 

water use. Through our partnership with the 

EPA’s WaterSense program we participate 

in programs focused on wise water use. 

Our research and innovation are focused on 

solutions such as water reuse, desalination 

and leak detection to help ensure a 

sustainable supply of water for a growing 

population. Additionally, we work with public 

utility commissions to establish appropriate 

signals about the true value of the service 

and promote the efficient allocation 

of scarce resources. Learn about our 

approaches in the Engaging with Customers 

and Communities and Case Study sections. 

Another Perspective 

“As we move deeper into the 21st 

century, water companies and policy 

experts face a series of daunting 

challenges, including increasing demand 

for clean water, aging infrastructure 

and urban water pollution, and climate 

disruption. Yet two potent solutions 

have emerged that can address these 

challenges: water efficiency and green 

infrastructure. These two tools have the 

power to transform our relationship to 

water in an era of growing scarcity and 

to ensure a consistent supply of clean, 

safe water for our nation. 

“Efficiency doesn’t mean going without; 

it means doing more with less. A host 

of new measures and technologies are 

making it possible for communities to 

get more productivity using less water. 

By making our homes, offices and farms 

more efficient, we can also save energy, 

since the energy costs embedded in 

water are often significant. 

“Green infrastructure—things like 

urban forestry, street-edge gardens, 

and pervious pavement—is a proven 

and cost-effective way to prevent 

polluted runoff. But it also generates 

many additional benefits. It helps with 

water supply challenges by providing a 

place to infiltrate (or store) rainwater 

that would otherwise runoff and deliver 

pollution to rivers and the ocean. It 

adds more green space to communities, 

raises property values, and it improves 

community aesthetics and livability. It is 

also cost-effective. The EPA found that 

in most cases, upfront costs were lower 

for green projects than for conventional 

ones, and the savings in the green 

cases ranged from 15 to 80 percent. 

“Efficiency and green infrastructure are 

two pillars of good water policy today. 

They help companies like American Water 

deliver clean, steady supplies of water to 

their customers while streamlining costs 

at the same time. But they also do it in 

a way that enhances social responsibility 

and commitment. Both measures save 

customers money, prevent pollution 

that endangers our families, and 

buffer communities from the impacts 

of climate change. 

“That’s what makes green infrastructure 

and water efficiency 21 st century 

solutions: they are good for investors, 

good for consumers, and good for 

the environment.” 

David S. Beckman 

Director, Water Program & Senior Attorney, 

Natural Resources Defense Council 


INFRASTRUCTURE NEEDS 

Since the time of American Water’s 

beginnings, a massive water infrastructure 

has been built to supply homes and 

businesses with water and to treat 

wastewater. Today, our country’s water 

infrastructure is in serious need of upgrade 

and maintenance. In fact, the 2009 Report 

Card for America’s Infrastructure, released 

by the American Society of Civil Engineers, 

gave water and wastewater infrastructure 

in the country a D-minus grade. 

Some of the problems confronting the 

current infrastructure include corrosion 

of pipes, leaks and eruptions. The risk 

of delaying replacement or repair could 

be severe. Already, aging water systems 

discharge billions of gallons into our 

surface water every year. Leaking or 

broken pipes waste nearly 2 trillion 

gallons of clean drinking water each year. 

Infrastructure malfunction can disrupt any 

and all water services, and problems are 

more likely to occur as equipment ages. 

Water infrastructure is costly. Current 

EPA estimates on how much it will cost to 

replace aging drinking water infrastructure 

alone are approximately $335 billion over 

the next 20 years. Add the estimated costs 

for wastewater and the amount needed 

over the next 20 years could approach 

or exceed $1 trillion. That investment 

will lead to higher costs for water, so any 

considerations of infrastructure must 

also consider the additional challenge of 

cost. Just as we need a long-term and 

sustainable solution to our country’s 

infrastructure needs, we also need 

regulatory and public policies that maintain 

and enhance the ability of the service 

providers to attract necessary capital at 

cost-effective rates. 

At American Water, we take a 

comprehensive approach to making 

decisions about infrastructure investment 

needs that includes considering the longterm 

needs of communities, the current 

condition of the water system and upgrade 

needs, and new innovations that can be 

applied. Additionally, we consider the 

capacity of the built infrastructure as well 

as the natural infrastructure, ecosystem 

and local watershed. Learn more 

about our approaches in our Integrated 

Water Resource Management, Water 

Management Performance and Case 

Studies sections. 

The water and wastewater treatment process requires diligent 

maintenance, repair and timely replacement of complex networks of 

infrastructure to maintain consistent, high-quality service and supply. 


perspective on: new water realities 

CLIMATE VARIABILITY 

Climate variability introduces an additional 

level of uncertainty about our future water 

resources. According to the EPA, the 

growing greenhouse gas (GHG) buildup 

in our atmosphere is creating increased 

climate and weather unpredictability. For 

example, precipitation and runoff are likely 

to increase in the Northeast and Midwest 

in winter and spring, and decrease in 

the West, especially in the Southwest, in 

spring and summer, according to the EPA. 

Most of the infrastructure designed 

to ensure U.S. water quality is based 

upon the historical trends of the timing, 

temperature, quantity of precipitation and 

water flow. Climate change, however, will 

likely affect one or more of these variables 

in almost every area of the country, 

resulting in disruption of water quality, 

unless adequate contingency planning 

is made. 

There are many uncertainties associated 

with changing climate patterns and 

its impact on water, but there is little 

doubt that climate variability could 

disrupt water quality and supply without 

adequate planning and risk assessment. 

American Water’s expertise and risk 

management processes are helping us to 

plan for this new water reality. We build 

climate change considerations into our 

approach to evaluating future supplies, 

managing risks, and preparing for weatherrelated 

events in order to determine the 

full requirements of our water systems. 

Our approach uses Comprehensive 

Planning Studies (CPS) to evaluate the 

condition of water systems and to project 

future needs and impacts. Climate change 

risk is built into the CPS so that we are 

better able to understand the future 

requirements of our water systems. 

We supplement our CPS with other tools 

to help plan for some of the more extreme 

impacts of climate change, including 

severe drought. For example, we develop 

Water Conservation Plans and Drought 

Response Plans to greatly reduce usage 

in times of severe drought. We develop 

Emergency Response Plans in response 

to extreme flooding in order to protect 

communities and our facilities. 

Read more about how we are actively 

addressing the climate variability challenge 

in our Energy and Water, and Enterprise 

Risk Management sections. 


“Throughout the latter half of the 20 th 

century, the common refrain about water 

challenges in America went something 

like this: ‘Water quantity is the problem 

of the West, and water quality is the 

challenge of the East.’ 

“The East got a loud wake-up call at the 

dawn of the new millennium. By 2001 

the Atlantic seaboard was panicked by 

a searing multi-year drought that drew 

rivers and water supply reservoirs to 

their lowest levels in recorded history. 

Large metropolitan areas found 

themselves within months of running out 

of water. 

“The recent Eastern drought—or for that 

matter, the Big Dry of the last decade in 

the Colorado River basin of the West— 

could simply be the lowest dips in the 

long-term precipitation record, or a 

bellwether of climate changes to come. 

For water managers, the conclusion is 

the same: from Maine to Florida and 

Georgia to California, too many urban 

water supply systems are vulnerable to 

climate variability. With each new year, 

as the accuracy of climate predictions 

increases and real-world evidence of a 

shifting climate mounts, we are coming 

to realize that we’re going to have to 

expect more of this variability and less 

reliability in our water supplies. The 

weather just ain’t what it used to be. 

This report from American Water 

highlights the appropriate responses. 

Water managers need to start 

integrating climate change projections 

into their water supply plans. They 

should not just plan for drought 

management; they should expect it 

and be fully ready to implement it. They 

should maximize water use efficiency 

and conservation measures; it is easier 

to maneuver a lighter boat than a heavy 

one when trouble arises. They should 

protect the ‘natural infrastructure’ that 

buffers us from extreme hydrologic 

variation: healthy watersheds, wetlands, 

floodplains. They should leave enough 

water for nature. 

“We can manage our way through this 

uncertainty. We must. People and nature 

are counting on us.” 

Brian Richter 

Managing Director, Global Freshwater 

Program, The Nature Conservancy 


Our Priority 

YOUR WATER 

In this section we describe our approach to managing our most material 

corporate social responsibility issues. These include responsible water 

resource management, investments in energy efficiency, ongoing 

engagement with the communities we serve, efforts to ensure 

affordable water service, dialogue with public policy makers and an 

ethical approach to business. 


perspective on: governance integrated water and ethics resource management 

Our Making business the most 

of depends our resources. on trust. 

We operate the 

largest 

seawater desalination 

plant in the U.S. 

Efrain Rodriguez, Tampa Bay Seawater 

Desalination Plant 

Developing integrated solutions to meet community needs 

A century ago the traditional definition of water management focused on caring for basic infrastructure. But 

over the 125 years of American Water’s operations, that definition has changed dramatically. 

Because clean water is such an essential component of people’s health, our economy, and our environment, 

managing this resource demands a more holistic and integrated approach, which considers the whole water 

cycle. Integrated water resource management (IWRM) focuses on understanding all of the water resources 

available to the communities we serve and the surrounding regions, actively caring for those resources, and 

providing solutions that best match an area’s water needs and constraints. It is a more holistic assessment of 

water solutions than traditional, single solutions by individual entities. Key components of IWRM are identified 

on the following page. 


perspective on: INTEGRATED water resource management 

• Identifying and giving balanced 

consideration to supply and demand 

management planning alternatives. 

This could include evaluation of water 

resource use and demands from 

agriculture, industry, power generation 

or other significant users of the regional 

watershed resources. Coordinated 

drought management planning is often 

included in the scope of IWRM. 

• Considering the availability and use 

of alternative or distributed supplies 

(reuse, groundwater recharge, storm 

water retention/treatment, nonpotable 

supplies, etc.) as appropriate. 

Green solutions such as low-impact 

development techniques, bio-swales, rain 

barrels and gardens, infiltration basins, 

etc., would also be included. 

• Analysis of engineering, economic, 

societal and environmental costs and 

considerations while balancing the 

needs of competing users and multiple 

objectives of the use of the resources. 

• Inviting an open and participatory process 

involving all stakeholders and striving for 

consensus, while encompassing leastcost 

analysis of short- and long-term 

planning options, and satisfying utility and 

regulatory policy goals. 

• Identifying and managing risk and 

uncertainty including emerging guidance 

on relevant issues such as the potential 

impacts of climate change. 

• Encouraging coordination of planning 

between water and wastewater utilities, 

environmental agencies/NGOs, land use 

planners, transportation planning, etc., 

in a specific region. 

IWRM is a continuous process 

that typically results in the development 

of a comprehensive water resources 

management plan. On a service 

area specific basis, the extension of 

American Water’s Comprehensive Planning 

Study (CPS) process is a logical way to 

evaluate and incorporate elements of 

IWRM. The CPS helps to understand both 

current and future demands and constraints 

on water resources. Through the CPS 

process, potential new supply-side and 

demand-side solutions and approaches 

can be developed. The process can go 

beyond evaluating the existing water system 

infrastructure, by building in a process 

of internal and external stakeholder 

engagement to gain understanding for the 

needs and perspectives of a wide range of 

constituents. 

We seek active stakeholder involvement 

at key milestones in the process to help in 

the development and support of optimal 

solutions for the communities and regions 

served. Stakeholders can include local and 

state government agencies, fire districts, 

community, business and environmental 

organizations, customer focus groups and 

other utilities. 

IWRM is typically an ongoing, multi-year 

process that can be initiated independent 

of or integrated with other initiatives or 

planning studies. 


“Our approach to Integrated Water 

Resources Management takes a 

comprehensive look at all the sources of 

water available to a community, and then 

develops an integrated solution to meet 

the drinking water, wastewater, and other 

water needs of a community. We have 

always looked at available ground and 

surface supplies, but we are expanding 

the pool of available resources to include 

ocean and brackish ground water for 

desalination opportunities. Rather 

than discharging wastewater into our 

nation’s waterways, we are evaluating 

technologies to reclaim wastewater and 

use it for appropriate applications. 

We have some great examples of water 

reclamation projects and we will continue 

to match long-term water solutions with 

the needs of the communities we serve. 

“Because of our size, our geographic 

distribution, and the variety of systems 

we own and operate, we have experience 

with a broad range of technologies and 

expertise. We have top-notch research 

capabilities and can apply these 

innovations into the communities where 

we operate. This combination sets us 

apart in being able to deliver the best 

results for effective water management.” 

Dr. Mark LeChevallier, 

Director, Innovation & 

Environmental Stewardship, 

American Water 

Corporate responsibility report 2010 23

perspective on: INTEGRATED water resource management 

WATER SOLUTIONS 

Water Reuse 

Over the last 20 years, American Water 

has built and maintained 89 water reuse 

systems, some of which recycle 100 

percent of the wastewater treated on the 

site. This recycled water is reused for 

HVAC systems, flush water and landscape 

irrigation, greatly reducing demands on 

fresh water supplies. American Water’s 

reuse systems are tailored to meet the 

specific needs and conditions of different 

structures and regions. Each reuse system 

uses a similar process which filters out 

solid materials, while useful bacteria in 

the wastewater are used to breakdown 

contaminants and other materials. 

Exposure to ultraviolet light destroys 

any remaining harmful bacteria while 

disinfection removes odors or colors. 

Water reuse is a solution that helps to 

fulfill day-to-day water needs without 

depleting water supplies. Learn more 

about our water reuse systems in our 

water management performance section 

and our water reuse case studies. 

Desalination 

American Water also has experience 

with desalination. Since 97 percent of 

the earth’s water consists of seawater, 

desalination, a technology that removes 

salt from ocean water, can be a viable 

way to provide water to water-stressed 

coastal regions. Desalination may play an 

increasingly important role in the U.S., 

especially coastal areas where fresh water 

supplies may not be able to meet future 

demands. 

American Water operates the largest 

seawater desalination plant in the United 

States in Tampa Bay, Florida, an area 

where population growth is outpacing 

water supplies. The Tampa Bay Seawater 

Desalination Plant is providing up to 

25 million gallons of water per day. The 

facility uses industry-leading technology 

based on reverse osmosis that surpasses 

EPA standards and local regulations. 

Additionally, to capitalize on energy 

efficiency, the plant captures and reclaims 

residual process energy created during 

the treatment process to be used as an 

energy source. 

California American Water is working with 

local agencies to pursue a water solution 

in Monterey that includes desalination. 

The project includes: 

• 10 million gallon per day brackish water 

desalination facility 

• 10 mile pipeline delivering desalinated 

water from Marina to the Monterey 

Peninsula 

• 10 million gallon storage facility 

Desalination Technology 

In the desalination process, seawater 

travels through a multi-step screening 

and settling process to clear out shells 

and other debris. Next, after chemical 

treatment, the water travels through 

sand filters to remove smaller debris, 

including microscopic materials. To remove 

the salt, use of reverse osmosis—or 

pumping pretreated water to extremely 

high pressure to force this water through a 

semi-permeable membrane that traps salt 

and other minerals—purifies the water. 

After reverse osmosis treatment, the 

treated water is blended with treated water 

from other sources and then delivered 

to distribution systems and residents in 

the region. 


perspective on: governance energy and water and ethics 

Our business 

our depends resources. on trust. 

Preserving and protecting 

Reducing greenhouse gas 

emissions by more than 

15 percent 

in less than 10 years 

A Tennessee American Water employee 

uses the latest technology to check for 

underground leaks. 

Reducing the energy footprint oF our services 

Energy and water are inextricably linked. Because water is heavy and must move through many process steps 

before it reaches customers’ taps, public water supply and treatment is one of the world’s most energyintensive 

systems. Before it reaches the consumer it has typically been pumped from the source to the 

treatment facility, where further energy will be used in the treatment process. Water will then be pumped to a 

treated water reservoir and may require further pumping in the distribution system. Throughout the process, 

there can be additional inefficiencies if water is lost in the system due to leaky pipes. Once in customers’ 

homes there is more energy used in order to heat water for showers, washers and cooking. Additionally, we 

use energy to treat and discharge wastewater. 

American Water has an overarching goal to reduce the energy footprint of our water services. Reducing energy 

intensity of our water services achieves several goals at once. Energy efficiency helps to reduce costs and 

drive down our operating expenditures—cost savings that can be translated into savings on our customers’ 

water bills. Additionally, by reducing the embedded energy in water, American Water also reduces greenhouse 

gas (GHG) emissions that impact climate change. 


perspective on: energy and water 

American Water has a goal to lower our 

GHG emissions per volume of water we 

produce by 16 percent from 2007 levels 

by the year 2017. We have a number of 

programs in place to meet this goal (read 

more in our environmental performance 

section), but our primary focus is by 

improving the energy efficiency of the 

water pumping process, which accounts for 

approximately 90 percent of the company’s 

GHG emissions. Additionally, water 

conservation represents an important 

opportunity to reach substantial energy 

savings and is consistent with our vision of 

more sustainable water management. 

INCREASING PUMP EFFICIENCY 

The vast majority of our electricity 

consumption is used to pump water from 

source to treatment and storage facilities 

and on to our customers. Improved 

pump efficiency is an opportunity to 

reduce energy use and decrease our 

carbon footprint. 

We are testing the efficiency of our 

pumps, evaluating the alternatives 

for improvement, and designing 

enhancements. For example, our 

maintenance services group routinely 

conducts “wire to water” testing of our 

large pumps to identify any pumps that 

are not operating at optimal efficiency. We 

also track an Energy Usage Index which 

calculates the amount of energy to pump 

a thousand gallons of water to identify 

locations where improvements in energy 

use are possible. We have updated our 

engineering standards for pump stations 

to incorporate the latest designs for 

efficiency. We have added new pump 

efficiency projects to our five-year capital 

plan and will be executing on the projects 

over the next seven years. 

WATER AND ENERGY CONSERVATION 

All water conservation measures reduce 

the volume of water pumped, treated 

and distributed to customers, reducing 

treatment costs and saving energy and 

costs at each of those steps. 

Reducing Water Loss 

American Water is working toward reducing 

the amount of water that is lost in the 

system due to leaks in pipes or mains. 

We have a variety of programs in place 

to detect and repair leakages. These 

include acoustic leak detectors that can 

continuously monitor vibrations in pipes 

so that we can pinpoint where necessary 

repairs or replacements are needed. 

Additionally, pressure management can 

reduce surges that lead to leaks. Once 

leaks are found, American Water develops 

an action plan to reduce them through 

different options such as replacing pipes, 

repairing pipes, or installing devices to 

protect vulnerable pipes. 

Learn more about our water 

conservation efforts. 

Reducing Energy Use 

Although lighting accounts for 

less than one-half of one percent 

of American Water’s electricity use, 

facilities are incorporating high-efficiency 

lighting technology to reduce energy use. 

American Water is working to improve its 

efficiency of its fleet of cars and trucks 

and has implemented a “no idle policy” 

to improve fuel efficiency. In Pennsylvania 

we are piloting a technology that allows 

our large energy consuming sites to 

reduce their electric consumption during 

Electricity and Water Use By the numbers 

Drinking Water and Wastewater Consumed 

• 3% of domestic electricity 

• 7% of worldwide electricity 

• 19% of California electricity 

peak events or times of energy usage. 

This “demand management” technology 

will avoid the need for additional power 

generation and reduce energy costs for 

our customers. 

Water utility energy use varies widely from 0.25 to 3.5 kWh per 1,000 gallons of 

drinking water produced and delivered. 

The median 50% of water utilities servicing populations of more than 10,000 had 

electricity use between 1.0 and 2.5 kWh/1,000 gallons. 


perspective on: governance engaging with and customers ethics and communities 

Our business 

where depends we live on and trust. work. 

Making a difference in the communities 

Serving more than 

1,600 

communities 

With nearly 650 dedicated customer service 

professionals on staff and help available 

24 hours a day, seven days a week, our 

customers know that we are committed to 

providing exceptional service. 

customer education 

Serving over 15 million customers, American Water is deeply embedded in the 1,600 communities that we 

serve. We engage with our customers on a daily basis to ensure we are responding to what they care about 

most. They value what we value—water quality, quick response, knowledgeable staff and environmental 

responsibility. 

We believe in educating our customers on the value of water and empowering them to make smart decisions 

about water use. We work together through a variety of methods, including special events, open houses, 

speaking engagements, water treatment tours, educational materials, bill inserts and our websites. 

We offer assistance in understanding how to read water meters, adjust irrigation systems, conserve water and 

landscape with drought-tolerant plants. We are also proactive in educating communities, customers and other 

stakeholders on the true value of water and the need for ongoing infrastructure investment. 


perspective on: governance customers and and communities 

ethics 

Stream of Learning Scholarship 

As part of our commitment to water resource education we launched the Stream 

of Learning scholarship program in 2010 in Pennsylvania and The Ripple Effect 

Scholarship in Kentucky. These programs provide scholarships to students who 

plan a course of study critical to the water and wastewater industry. 

Contributing to the communities where we live and work to help solve important 

local challenges strengthens neighborhoods and makes a difference in our 

customers’ lives. 


“In January, 2010, California 

American Water joined federal, state, 

and local officials in Carmel, California 

to sign a “collaboration statement” 

promising they all would make a good 

faith effort to remove the San Clemente 

Dam on the Carmel River. 

“The San Clemente Dam is a 106-foothigh, 

concrete-arch dam built in 1921 

to supply water to the Monterey 

Peninsula’s growing population and 

tourism industry. In 1991, experts 

determined the dam didn’t meet 

modern seismic stability and flood 

safety standards. After researching 

many options, environmental groups 

and public agencies concerned with 

protection and enhancement of the 

Carmel River ecosystem concluded dam 

removal, while more expensive, was the 

best plan. 

“To remove the structure, a rerouting 

of the Carmel River was proposed 

to bypass 2.5 million cubic yards of 

silt that have accumulated behind it, 

an innovative approach that avoids 

dredging. It would take more than 

200,000 truckloads to remove the silt, 

making dredging both environmentally 

unfeasible and objectionable to 

nearby residents. 

“The partnership marks a major 

milestone for us. This multi-year, 

$84 million project to remove the dam 

is an example of how we partner with 

local agencies to protect local habitat 

within our service area. The project is 

the first of its kind in the state and is 

being viewed by experts as a guide for 

future dam removals. 

“To date, California American Water 

has taken measures to reduce risks 

at the dam while working with national 

and state agencies to implement the 

removal project with minimal costs 

to customers. It has also committed 

$50 million to the project and 

designated 928 acres around the 

dam as parkland.” 

Partnerships to 

Engage with Customers 

“Fix-a-leak” Campaign 

American Water joined the EPA WaterSense 

program in declaring March 15-21, 2010, 

“Fix a Leak Week”. The purpose of the 

initiative was to remind homeowners to 

check plumbing fixtures and irrigation 

systems for leaks, due to the fact that 

minor water leaks account for more than 

one trillion gallons of water wasted 

each year in U.S. homes. In different 

states across the country, American Water 

teamed up with local partners to reach 

out to schools and community groups 

with education programs and to provide 

the tools and resources to help detect 

and repair leaks. Our WaterSense 

Public Service Announcements can be 

viewed by visiting www.savewatertoday.org. 

“We’re for Water” Campaign 

American Water partnered with the EPA 

for the “We’re for Water” cross-country 

tour. The campaign is a national effort 

to educate consumers about watersaving 

behaviors and WaterSense labeled 

products. The campaign encourages 

consumers to adopt simple changes at 

home to start saving water. The project 

also introduced a friendly competition 

between families to conserve water. 

Robert MacLean 

President 

California American Water 


perspective on: customers and communities 

WORKING WITH OUR COMMUNITIES 

Managing our water resources requires 

the participation of all our stakeholders, 

especially our communities. We actively 

meet with our community stakeholders 

to understand their perspectives and to 

foster dialogue and shared goals. 

We engage with them via community 

dialogues and events, one-on-one 

meetings and through public education 

opportunities. 

Developing Solutions for 

New Communities 

Designing and maintaining water and 

wastewater systems for communities 

begins with a clear understanding of the 

community and the impact and cost of 

potential solutions. A key part of our 

planning is engagement with community 

members, government agencies and local 

organizations to understand their needs 

and how water resources are used. We 

work with communities and their leaders 

to look at all of their options for water 

delivery and treatment and assess what 

is most cost effective, sustainable and 

environmentally friendly. 

Consolidation of Local Water 

and Wastewater Systems 

At times it makes sense to develop water 

resources and systems at a regional level 

rather than for each individual community. 

Often, this can be as simple as linking 

a number of small communities to a 

common water system. By centralizing 

water service facilities, community 

members benefit from efficient use of 

water resources, better service and quality 

and typically lower cost. 

Sharing Expertise 

Utility commissions periodically request 

our expertise to purchase small 

unsustainable water systems that have 

fallen into disrepair and bring them back 

into regulatory compliance. Municipalities 

and cities have called directly on our 

experience with design, construction, 

and operation of water systems and 

established operations and maintenance 

contracts to address compliance issues. 

An Ohio American Water meter reader opens a “pit” to obtain a reading. 


perspective on: ACCESS AND AFFORDABILITY 

Our An exceptional business value 

depends on trust. 

for an essential resource. 

Water is generally 

less than 

a penny 

per gallon 

Missouri American Water field service representatives 

customer education 

Affordability of water service is a growing concern as the costs of providing service continue to increase 

due to the need to replace aging infrastructure, comply with increasingly strict water quality requirements, 

and address the host of challenges to assuring sustainable, high-quality, reliable service in the future. 

American Water is providing high-quality water service safely, efficiently and at the most cost-effective 

rate possible. The cost impact of providing high-quality water service is an important issue for all of our 

customers, especially those who face economic hardships. Issues surrounding concepts of affordability, 

however, are complex and must be viewed in perspective. The term itself is ambiguous and difficult to define. 

In general, annual costs for water service are lower than for other traditional public utility services, such 

as electricity, natural gas and telecommunications services. In addition, customers, including low income 

customers, often spend far less for essential water service than for many other non-essential services and 

products, such as cable television, entertainment, tobacco or bottled beverages. 



Nonetheless, there is no question that 

for certain customers, increases in 

the cost of essential services of any 

type, including water, can contribute to 

economic hardship. In confronting issues 

of affordability, however, it is crucial to 

separate the pricing of the service from 

programs designed to mitigate adverse 

impacts on the most vulnerable customers. 

In order to help ensure sustainable, 

high-quality service, and to promote 

conservation and wise use of this scarce 

resource, it is essential that prices reflect 

the true costs to provide the service. 

This is necessary to send appropriate 

signals about the true value of the service, 

prevent wasteful usage, and promote the 

efficient allocation of scarce resources. 

This is true not only with regard to water 

itself but also with regard to the resources 

necessary to treat and deliver water, such 

as energy usage and associated GHG 

emissions and the overall carbon footprint 

of the provision of water service in an era 

of climate change. In fact, the EPA has 

recognized full cost of service pricing as 

one of four “Pillars of Sustainability” along 

with better management, water efficiency, 

and watershed protection. 

American Water’s policy with regard to 

affordability, therefore, is that water 

service should be priced at the true cost 

to provide the service, reflecting its true 

value, and the adverse economic impacts 

on vulnerable customers can and should 

be addressed through targeted assistance 

programs. Such programs should be 

designed to provide that assistance to 

those that truly need it and not to provide 

general subsidies to those customers 

who are not economically distressed. 

The National Association of Regulatory 

Utility Commissioners has identified 

targeted customer assistance programs 

as a best practice in addressing issues of 

affordability, along with other regulatory 

mechanisms such phase-ins, innovative 

payment arrangements, and rate 

consolidation of multi-divisional utilities 

to create economies of scale and spread 

costs over a larger customer base. Other 

types of customer assistance programs 

could be designed at the national level, 

similar to the Low Income Home Energy 

Assistance Programs in effect for energy 

customers. 

Most of American Water’s utility 

subsidiaries have customer assistance 

programs that contain elements such 

as these or others that might involve 

helping the consumer reduce water usage, 

providing financial assistance and other 

provisions. We continue to investigate 

ways to assist our customers in meeting 

their financial obligations while retaining 

appropriate pricing policies that promote 

sustainability and wise use. More 

information on our financial assistance 

programs including the H 2 

O Help to Others 

Program TM and Low Income Payment 

Program can be found in the Assisting 

Low-Income Customers section. 

determining water rates 

Though water rates vary across the country 

depending on variables such as source 

of supply, quality, levels of consumption, 

efficiency of infrastructure, energy costs 

and other factors, water service remains 

a relatively inexpensive commodity, 

especially as compared to other services 

such as gas or electricity. High-quality 

water service that meets all water quality 

standards is delivered to the tap at a 

price of less than a penny per gallon in 

most cases. 

However, water utilities are capital 

intensive relative to other utility services, 

requiring ongoing investment to maintain 

and improve existing systems and to 

make necessary capital outlays to promote 

long-term reliable service. 

As investor-owned water utilities, our 

subsidiaries and regulated utilities must 

go through a rigorous and transparent 

process, referred to as a general 

% OF ANNUAL HOUSEHOLD BUDGET* % OF ANNUAL HOUSEHOLD UTILITIES BUDGET 

3.0% 

2.4% 

1.8% 

1.2% 

.9% 

1.2% 

2.3% 

2.6% 

50.0% 

40.0% 

30.0% 

20.0% 

12.8% 

17.6% 

32.2% 

37.4% 

0.6% 

10.0% 

0.0% 0.0% 

Water & Natural Gas & Telephone Electricity Water & Other Natural Gas & 

Other Services Fuel Oil 

Public Services Fuel Oil 

* Source: Bureau of Labor Statistics-Consumer Expenditures Survey, 2008–2009 (assumes four person household). 

Telephone 

Electricity 



rate case, to determine rates for our 

customers. Typically, a public utility 

commission, board of public utilities, or 

other similar state economic regulatory 

agency has the statutory authority to 

review the proposed rates of privately 

owned water utilities for that state, and to 

set standards of service. 

In evaluating a rate case, state public 

utility commissions, or similar bodies, 

typically focus on six areas: 

• The amount and prudence of investment 

in facilities considered “used and 

useful” in providing public service 

• The operating and maintenance costs 

and taxes associated with providing the 

service (typically by making reference 

to a representative 12-month period of 

time, known as a test year) 

• The appropriate rate of return on 

invested capital 

• The tariff or rate design that allocates 

operating revenue requirements 

equitably across the customer base 

• The quality of service the utility provides, 

including issues raised by customers 

• Revenue at existing rates 

The general rate case process is designed 

to ensure transparency, which leads to 

public confidence that the rate increase 

approved by the commission and 

implemented by the utility is based on fact 

and cost, and balances the needs of the 

public as well as the utility. 

Our goal in the process is to provide 

clear, understandable and comprehensive 

information based on our in-depth analysis 

of rates that balance the need to provide 

American Water with a reasonable return 

on our investments with the need to 

protect consumers’ costs. 

CONTROLLING COSTS 

American Water employs management 

practices and cost containment 

techniques, while taking advantage 

of economies of scale, to enhance 

efficiencies and reduce operational 

costs. For example, our computer 

monitoring control systems in most of 

our treatment facilities minimize both 

operating costs and personnel needs. 

Through Shared Services, we centralize 

our backroom operations, which lowers 

our per transaction cost. Additionally, by 

leveraging our size we have centralized 

bulk purchasing of supplies, materials, 

insurance and employee benefits. 

We have also invested in technologies 

that lead to more efficient operations 

and service. For example, laptops were 

installed in service vehicles, moving 

us from a paper-based to a real-time 

work distribution system. Information 

is communicated to and from the field 

using wireless technology, which has 

enabled our field representatives to better 

manage their workload. Other examples 

of controlling costs through efficient 

operations include: 

• Installation of automated meter reading 

systems, which increase efficiency and 

reduce labor costs 

• Development of a centralized customer 

service center to better respond to 

customer needs and increase business 

efficiency 

• Investment in plant automation systems 

that can monitor and manage many of 

our operations at lower costs 

• Investment in leak detection equipment 

and programs to minimize water lost 

through water mains 

• A centralized laboratory that allows 

local American Water companies to take 

advantage of one of the most advanced 

water testing laboratories in the nation 

ASSISTING LOW-INCOME CUSTOMERS 

While water service continues to be a 

high value compared to other utilities, 

some families and fixed-income citizens 

may struggle with water bills. Affordability 

issues are particularly acute in 

communities with both high proportions 

of low-income customers and new water 

infrastructure needs. 

American Water provides assistance to 

our customers facing particular economic 

challenges. Our programs, coordinated at 

the state level, promote access to a basic 

level of service, even to customers facing 

financial difficulties. 

H 2 

O Help to Others Program 

The H 2 

O Help to Others Program was 

created to help those who need the most 

assistance with their water bills. The 

program provides three main services 

• Grants of up to $500 per year 

• Discounts on services 

• Water saving devices and education 



This program must be approved by state 

regulators before it can be implemented, 

and programs vary by state. The biggest 

programs are in states where we have 

the largest number of customers and/or 

where we can recover program costs within 

rate cases. To qualify for these programs, 

the total monthly income cannot exceed 

certain monthly thresholds, depending 

on state. 

Low Income Payment Program 

A grant from H 2 

O Help to Others Program 

may not cover the recipient’s entire water 

bill. For cases where customers need 

In 2010, across American Water, more than 20,000 

applications for assistance have been granted for a total 

of approximately $1,006,000. 

additional assistance we coordinate the 

Low Income Payment Program (LIPP). 

The program expands upon the H 2 

O 

Help to Others Program by taking that 

plan one step further. The Low Income 

Payment Program provides aid to the most 

economically challenged American Water 

customers in participating states. The 

assistance provided can be equivalent to 

as much as 20 percent of a customer’s 

total monthly bill, depending on a few 

factors including eligibility, income and 

family size. In addition, depending on the 

state, there are cash grants offered as 

part of LIPP as well. To qualify for LIPP 

assistance, there are some limits on the 

total monthly household income, and the 

criteria vary based upon state. 

lowering water usage 

In addition to providing support through 

our low-income programs, we also provide 

free advice and information to all our 

customers on how to reduce monthly 

water usage, including information on the 

EPA’s WaterSense program. Customers 

can also sign up for the American Water 

Wise Home water survey. Through 

this program we dispatch a company 

conservation specialist to the home to 

perform a comprehensive water audit, free 

of charge—in states where the program 

is approved. The specialist checks for 

leaks, inefficient watering systems, and 

other areas of potential water savings. 

The specialist will then create and provide 

the customer with a detailed report 

documenting their personal water usage in 

addition to offering tips to save water and 

lower water bills. 

We regularly engage with customers 

through town hall meetings, educational 

events, media campaigns and open 

houses to provide information about 

how they can lower their water bill and 

help protect water resources. Some of the 

simple steps that customers can 

take include: 

• Taking showers instead of baths— 

showers can save 45-55 gallons of water 

• Installing water-saving showerheads and 

shortening shower times by five minutes 

• Running only full loads in the dishwasher 

• Rinsing produce in a basin as opposed 

to under running water 

• Checking toilets for leaks—a leaky toilet 

can waste up to 100 gallons of water 

every day 

• Making use of drip irrigation 

Award-winning Campaigns 

Many of our water conservation 

campaigns have been honored with 

awards. For example, our Spring Into 

Action Water Conservation Wheel won 

the Public Relations Society of America 

San Diego chapter Silver Award of 

Excellence. 

WATER 

CONSERVATION 

WHEEL 

Spin the wheel and learn how much you can save 

by making a few small changes indoors and out. 

Conserving water is important during any time of 

year, and taking special care to be efficient during 

springtime can make a big difference. 



water for people 

Our commitment to promoting access 

to cost-effective water service extends 

beyond the regions where we operate to 

areas where communities are extremely 

vulnerable to water scarcity. Around the 

world, nearly a billion people do not have 

access to safe drinking water and 2.6 

billion are without adequate sanitation 

facilities. For nearly 20 years, 

American Water and our employees have 

supported Water For People, a nongovernmental 

organization that supports 

the development of locally sustainable 

drinking water resources, sanitation 

facilities and hygiene education programs 

in developing regions where water issues 

are most critical. In 2010, we donated 

$193,000 to Water For People. In addition, 

on an annual basis, we sponsor the 

participation of one of our employees on a 

visit to one of Water For People’s project 

areas to participate in developing a local 

water or sanitation project. 


“In September, 2010, I had the 

opportunity to travel to Bolivia on 

a Water For People-sponsored trip 

with a group of other water industry 

professionals. Water For People is 

an organization that partners with 

communities in developing countries to 

construct sustainable drinking water and 

sanitation facilities. American Water has 

raised money for them for the past 

20 years. 

“This was truly an eye-opening trip and 

something I wish everyone could have 

the opportunity to experience. From the 

first day when we met the staff I knew 

this was going to be a great experience. 

You could sense the dedication and true 

community involvement that each of 

the staff members shared. A number of 

things stood out to me. First, Water For 

People doesn’t simply write a check and 

turn it over. They actually partner with 

a community—who has applied for help 

and been accepted—by working with 

the local community and government 

leaders to make sure the money that 

is donated goes to the right project 

and is used in the right ways. I saw how 

the communities pulled together to not 

just install the system but also to get 

trained on how to maintain their system 

going forward. We visited a community 

that found an innovative way to use the 

collected waste to actually raise money for 

the community. I was truly impressed with 

the dedication and organization that each 

community we visited displayed. 

“Before I went on the trip, I attended 

the office rallies and participated by 

donating. Having gone on this trip, I now 

truly understand what Water For People 

does, how they help, and how American 

Water employee donations can make a 

dramatic difference in people’s lives. 

Dave Yungermann 

Operations Manager, St. Louis, MO 

Missouri American Water 


perspective on: Managing Risks 

Our business 


We have a responsibility to 

our customers and stockholders. 

We conduct more than 

ONE MILLION 

tests and 

measurements annually 

Tim Desmond, American Water Central Laboratory 

PROTECTING OUR BUSINESS AND OUR STAKEHOLDERS 

At American Water we approach risk management in a comprehensive way by identifying, prioritizing, 

managing and monitoring a full portfolio of risks impacting our organization. Over time we have developed 

policies, competencies and technology to execute this approach successfully. 

Through our risk management framework we identify events or scenarios related to our ability to serve our 

customers and manage water resources, then assess both their likelihood and their impact in order to 

develop a response strategy and monitor progress. A robust approach to risk management protects all our 

stakeholders including customers, communities, employees and business partners. 



Our risk management goals are ambitious 

and include: 

• Reducing unacceptable performance 

variability by identifying and evaluating 

the likelihood of major events and 

developing responses to mitigate the 

impact of potential events 

• Aligning our business strategy and 

corporate culture in a way that 

strengthens our risk management 

systems 

• Enhancing our overall corporate 

governance and strengthening our board 

and management oversight 

• Investing in state-of-the-art research and 

testing facilities 

a secure and resilient 

water system 

Because high-quality, reliable water service 

is an integral part of daily life, our water 

systems demand the appropriate security 

and protection. We understand the large 

impact that would occur if our water 

infrastructure or supply were compromised 

by either man-made or natural disaster. For 

example, a loss or contamination of water 

could lead to large-scale emergencies. 

Additionally, we also know that even 

small disruptions in water service caused 

by electricity outages or equipment 

failures can have a major impact on our 

customers. 

Comprehensive Planning Studies 

(CPS) are a primary means that 

American Water uses to evaluate asset 

condition and performance, project future 

needs, and identify capital projects which 

may be needed so that a system is able 

to meet required levels of service. The 

CPS, a master plan that assesses each 

component of the system, also identifies 

and prioritizes capital improvements 

needed for the system, to ensure a 

high level of service over a 15–20 year 

planning horizon. 

In addition to the CPS, vulnerability 

assessments are conducted at our 

facilities in order to identify opportunities 

for improvement of security systems. 

These assessments are conducted 

on a periodic basis and output from 

the assessments is used as a basis 

for implementation of further security 

enhancements to our systems. 

Planning studies also assess the 

system capabilities to meet current and 

future regulatory requirements, growth 

opportunities and operational needs. 

Projects that have been developed through 

the planning study will have undergone 

thorough analysis of all current and future 

risks to the system. 

Additionally, we engage with external 

stakeholders such as community leaders, 

fire chiefs, NGOs and community groups to 

understand their perspectives, needs 

and priorities. 

sharing our expertise 

American Water is not only active in 

securing our owned and operated 

infrastructure, we also share our expertise 

in protecting water resources with other 

stakeholders including the EPA and 

the Department of Homeland Security. 

Currently, we chair the Water Sector 

Coordinating Council (WSCC), which was 

formed by eight water and wastewater 

organizations to work with the federal 

government to recommend action to 

reduce risks in the water sector. One of 

the key outputs of the WSCC has been to 

develop a strategic framework that enables 

the government and industry to align their 

programs and investments to improve 

infrastructure protection. 

Climate Ready Water Utilities 

Climate change poses long-term risks 

and uncertainties to all water utilities, 

according to the EPA. Evaluating and 

preparing for those risks is a key part 

of our overall risk management strategy. 

American Water is part of the Climate 

Ready Water Utilities Working Group, 

established by the National Drinking Water 

Advisory Council, to prepare long-range 

plans that account for climate change 

impacts. 

The working group has developed the 

concept of a climate-ready adaptive 

response framework to illustrate the 

types of activities that a climate-ready 

utility should take in response to evolving 

climate science, local conditions, as well 

as adaptation and mitigation opportunities. 

The framework aids all water utilities, 

including American Water, to integrate 

evolving climate science into planning and 

management, prepare for changing local 

hydrological and meteorological conditions, 

and identify adaptation and mitigation 

opportunities. Additionally, the working 

group has developed tools, training 

and techniques to promote successful 

implementation. 



THE AMERICAN WATER CENTRAL LABORATORY 

When it comes to the quality of our 

customers’ water, there is no room for 

compromise. Through ongoing, rigorous 

analysis, we can be assured that our water 

meets or exceeds all regulatory standards. 

Our world-renowned research laboratory, 

based in Belleville, Illinois, supports all 

of our regulated and market-based states 

and businesses by conducting thorough 

analysis and quality measurement for 

compliance reporting. There, we perform 

tests to monitor for 100 regulated 

contaminants and other “emerging 

contaminants” that are not currently 

regulated, and we provide input to the EPA 

as they develop new testing regulations. 

Additionally, our local labs test water 

samples many times each day as water 

moves throughout the treatment process. 

Our approach focuses on the reliability 

of analysis to ensure that we have the 

necessary rigor to trust that our results 

are accurate. We have invested in stateof-the-art 

equipment as well as the 

capabilities of our laboratory scientists. 

The scientists at our lab continue to 

push the standards of excellence by 

developing new testing procedures to align 

with evolving regulation and to adapt to 

potentially new contaminants. The lab has 

set standards in the industry for testing, 

identifying and controlling contaminants 

even before specific regulations are in 

place. Our highly sophisticated analytics 

and research capabilities are why the 

EPA regularly consults with our research 

team in developing federal drinking water 

standards and regulations. 

Since 1993, our research team has won 

over a dozen awards for best research, 

nearly 60 competitive research grants 

totaling over $34 million, and have been 

granted three patents for our research. 

Each year, we conduct more than 

one million tests and measurements 

using the most advanced technology 

and equipment available at our stateof-the-art, 

world-renowned research 

laboratory in Belleville, Illinois, and at 

our local utility labs. 

At the American Water Central Laboratory in Belleville, Illinois, a Liquid Chromatography 

Mass Spectrophotometer—Mass Spectrophotometer Triple Quadrupole (LC/MS/MS) 

allows us to detect, identify and confirm even trace amounts of specific compounds in 

drinking water samples. 


perspective on: Innovation 

Our business 

depends innovative solutions. on trust. 

Driven to create and implement 

We have received 

more than 

60 grants totalling 

more than 

$27 MILLION 

Harold Smith, Illinois American Water 

Investing in new ideas 

We hold ourselves to a high standard of performance—one that values innovation and teamwork and consistently 

strives to improve the customer experience. In order to continue to provide high-quality service and to respond to 

the new realities faced by the water industry, we are actively looking for innovative ideas that can address these 

new water realities and fit with our vision of a sustainable water future. 

Through our Innovation Development Process (IDP), launched in 2009, American Water is bringing new 

solutions and technology to the marketplace. IDP is an initiative that combines research and development, 

technical expertise and infrastructure assets with innovations from both within American Water and from 

external business partners to create greater efficiencies in the areas of drinking water, water reuse, 

desalination, wastewater operations and bio-energy. Through IDP, we actively look for new ideas in the water 

industry, and then, when we find the right opportunities that match our goals, we help to accelerate the 

process of bringing those ideas to market. 


perspective on: Innovation 


“Through our Innovation Development 

Program, American Water is partnering 

with ENBALA Power Networks, a smart 

grid company, on a pilot project using 

smart grid technology. The project 

is designed to capture untapped 

efficiencies between large regional water 

systems and the electric network. The 

pilot test involves connecting four of 

American Water’s facilities to ENBALA’s 

smart grid platform and providing realtime 

system balance to the electricity 

system operator. Providing and distributing 

clean water is very energy intensive. This 

innovation is critical in making both 

the electrical system more effective 

and improving the efficiency of water 

treatment plants.” 

Steve Schmitt 

Vice President of Operations 



perspective on: Public Policy 

Our business 


Working towards a sustainable water future 

for our communities and our nation. 

We participate at the 

federal, 

state 

and local level 

We strive to be a resource for policymakers around the country. 

Working toward wise water policy 

The advancement of public policy that supports a sustainable water future is an important activity for waterrelated 

organizations from across different spectrums. For American Water, the motivation for engaging with 

policymakers goes far beyond commercial interests. By actively engaging with officials, decision makers 

and influencers both at the national and local level, we can help solve future water challenges. It is our 

responsibility to use our experience, scientific expertise and technical ability to work with policymakers and 

regulatory authorities to work toward wise water policies and legislation. 

Through our engagement with policymakers we emphasize the need to build on existing efforts to promote 

sustainable water infrastructure, to employ robust, comprehensive planning processes to deliver projects that 

are cost effective over their life cycle, resource efficient, and consistent with community sustainability goals. 


perspective on: Public Policy 

In 2010, corporate contributions to political candidates, parties and 

ballot measures as allowed by federal, state and local law totaled just 

over $56,685. A comprehensive process is in place to approve, track, 

record and report these contributions. 

In 2011, American Water will be developing a national Employees’ 

Political Action Committee as defined by federal law. Its contributions 

will be funded entirely by employees. Contributions will be tracked and 

reported through state and federal processes, including the Federal 

Election Commission. 

One of our goals is to be an educational 

resource for policymakers in the areas 

of water and wastewater management 

and to ensure that those who fund 

infrastructure improvement projects are 

well informed on what it takes to maintain 

healthy water and wastewater systems. 

In both 2009 and 2010, American Water 

hosted Congressional forums to help 

increase awareness of the state of our 

country’s water infrastructure, future 

water management challenges, risks to 

water resources, and potential solutions 

for a sustainable water future. The forums 

focused on public policy needs for the 

health and longevity of our nation’s water 

system, with particular attention paid 

to the aging infrastructure in the U.S. 

Our view is that the government can 

provide both incentives and disincentives 

for the way water, wastewater and 

stormwater utilities contribute to national 

goals for clean and safe water and how 

these goals interact with equally pressing 

priorities such as energy efficiency. 

American Water has also been an active 

participant in the conferences and 

educational programs sponsored by the 

National Association of Regulatory Utility 

Commissioners, and the U.S. Conference 

of Mayors, sharing our expertise in 

integrated water resource management 

and diverse solutions for water resource 

challenges for different regions. We also 

participate in public policy development 

through membership organizations such 

as the National Association of Water 

Companies and the American Water Works 

Association. 

American Water is also involved in multistakeholder 

meetings that bring together 

NGOs, academics, scientists and policy 

makers to explore some of the most 

complex challenges to water issues. For 

example, American Water participated 

in the Aspen Institute Dialogue on 

Sustainable Water Infrastructure. The 

discussion focused on the investments 

and policies needed to provide a more 

holistic approach to sustainable water 

infrastructure. The report resulting from 

the dialogue, Sustainable Water Systems, 

sets out ten policy recommendations 

agreed to by all participants. 


Our Performance 

In this section we describe our corporate social responsibility 

performance in 2010. The section covers environmental, social and 

governance issues, describing our goals and objectives, providing key 

performance indicators and metrics, and highlighting our challenges. 


perspective on: ethical performance 

Our Fostering business a culture 

of depends integrity. on trust. 

97 PERCENT 

of employees completed 

ethics training in 2010 

The New Jersey American Water team at the 

Swimming River water treatment plant 

ethical performance 

At American Water we pride ourselves in having a strong culture of integrity underpinned by our principles and 

values, and guided by our policies. The American Water Code of Ethics sets out clear and practical guidance 

for ethical conduct throughout our organization. 

The Code of Ethics ensures that all American Water employees understand how our core principles and 

values relate to a range of issues. With clear language and easy-to-understand examples, the document aims 

to provide our employees with support in judgments related to ethical business at the individual, team and 

company-wide level. In short, it is a guide to help employees understand what is expected of them and how 

to make good decisions. 


perspective on: ethical performance 

Business issues and situations covered by 

the Code of Ethics include: 

• Avoiding conflicts of interest 

• Fair dealing with customers, vendors 

and others 

• Handling sensitive information and 

safeguarding confidentiality 

• Honest, ethical and open dealings with 

government officials 

• Workplace conduct 

All employees are trained on the 

contents of the Code of Ethics, beginning 

with an initial orientation when employees 

join American Water. A revised Code of 

Ethics was distributed to all employees 

in January 2010 with a new introduction 

from the Chairman of the Board, George 

MacKenzie, and CEO Jeff Sterba. 

Trainings are offered online and in-person. 

Our training incorporates real-life situations 

in which there are not necessarily right 

or wrong answers. The idea behind 

this approach is to stimulate candid 

discussions among employees. 

Through the Code of Ethics, our trainings 

and ongoing communication and 

guidance, we make it clear that it is the 

responsibility of all our employees to 

make ethical conduct an essential part 

of the daily fabric of our business. We 

also emphasize that it is the responsibility 

of every employee to report any violations 

or suspected violations through our 

Confidential Ethics Hotline, or to 

Divisional Presidents, Human Resource 

representatives or members of American 

Water’s legal department. Our violations 

reporting system or procedure maintains 

confidentiality to the greatest extent 

possible throughout the process. 

All calls to the Confidential Ethics 

Hotline are reviewed by members of 

our Ethics Committee which consists of 

representatives from Human Resources, 

Legal, Finance and Operations. The Ethics 

Committee reports to the Audit Committee 

of the board of directors. 

Through our hotline, employees 

raised 217 cases. Of these, 

57% resulted in corrective action. 

In 2010, approximately 97 percent of our employees completed ethics 

training either live or via webinar. 

Percentage of Employee Code of Ethics Certifications in 2010: 

• 100 percent from ML1-ML4 and L5 – L8* 

• 92 percent from remaining non-union employees 

• 29 percent from union employees 

*ML1 - ML4 represent the levels assigned to Executive Management team members, 

L5 - L8 represent levels assigned to non-union employees at the minimum level of manager. 


“Our Code of Ethics training provides 

a framework of the type of behavior we 

expect of all American Water employees. 

Quite simply, we expect our employees 

to act ethically and respectfully toward 

each other, our customers, our vendors 

and all others with whom we work. 

“We want to be known for conducting 

our business with honesty and integrity, 

so the training covers such areas 

as avoiding conflicts of interest, fair 

dealing, and safeguarding sensitive 

information. It’s also imperative that our 

employees have a safe and professional 

atmosphere in which to work, so we 

address respect for privacy, harassment 

and illegal substances, as well. 

“When designing the training, we 

wanted to make it interactive to help 

employees identify potential issues 

and—perhaps more importantly—teach 

them how to address them. Rather 

than running through a list of rules, we 

try to present real-life situations that 

employees could find themselves in, 

and encourage the groups to discuss 

how they would handle them. We also 

stress the resources available to them, 

including a variety of avenues to direct 

any questions or concerns. 

“We use internal resources—our 

Human Resources team—to present 

the information because they can gain 

a unique perspective on how employees 

think by hearing them work through the 

situations and remain engaged to 

follow up on any issues discussed 

during the training. 

“We believe that conducting our training 

this way provides employees with an 

increased ability to recognize potential 

issues through practical examples and 

provides them with the knowledge 

of what to do if they are faced with 

these issues.” 

Kelley Walker 

Chief Administrative Officer 

and General Counsel, American Water 


perspective on: water management performance 

Our business 


Managing a life essential resource 

is a responsibility we take seriously. 

American Water was 

43 times BETTER 

than the industry average 

for compliance with drinking 

water quality standards 

Scott Ballenger, Ohio American Water 

Managing for the long term 

Managing water resources is complex, demanding constant vigilance to help ensure water quality, as 

well as a long-term view to ensure a sustainable water future. At American Water, we have developed a 

comprehensive approach to Integrated Water Resource Management that entails maintaining a range of 

water resources and assets—both the man-made assets as well as the natural environment. 

We have to consider a range of interrelated factors when making decisions about water-management 

including population changes and demand trends, climate change and variability, short-term and long-term 

infrastructure needs, and opportunities for innovative solutions. 

Our Integrated Water Resources Management program focuses on understanding all of the water 

resources available to American Water communities and surrounding regions, actively caring for those 

resources and providing solutions that best match an area’s water needs and constraints. It is a more 

holistic assessment of water solutions than traditional, single solutions made by individual entities. 

Participation from internal and external stakeholders ensures that local interests and points of view are 

understood and that all viable options are considered, which assures that solutions meet the needs of 

customers as well as the regional community. 



water resources and planning 

In our long-term planning, we evaluate 

quality, quantity, growth needs and 

alternate sources of water supply as 

well as transmission and distribution 

capacity. Sources of supply are seasonal 

in nature and weather conditions can 

have a pronounced effect on supply. 

In order to help ensure that we have 

adequate sources of water supply, we use 

Comprehensive Planning Studies (CPS) 

and maintain drought and contingency 

plans to minimize the potential impact on 

service through a wide range of weather 

fluctuations. In connection with supply 

planning for most surface or ground water 

sources, we employ sophisticated models 

to determine safe yields under different 

rainfall and drought conditions. Surface 

and groundwater levels are routinely 

monitored for all supplies so that supply 

capacity may be predicted and mitigated, 

as needed, through demand management 

and additional supply development. 

Through our CPS process we regularly 

evaluate water systems to assess: 

• Quantity and quality of available supplies 

• Adequacy and effectiveness of treatment 

processes and waste handling systems 

• Adequacy and efficiency of distribution 

pipeline networks and pumping facilities 

in delivering safe, adequate water while 

minimizing water losses 

• That proper permits are maintained to 

ensure legal authorization of withdrawal 

of supplies from both groundwater and 

surface water sources. 

Our goal is to maintain Comprehensive 

Planning Studies and/or targeted 

studies for all of our water systems 

serving 500 or more customers. 

REGULATED SUBSIDIARY: SOURCES OF WATER SUPPLY (2010) 

Regulated Subsidiary 

New Jersey American Water Company 

Ground Water 

22% 

Surface Water 

73% 

Purchased 

5% 

Pennsylvania American Water Company 

7% 

92% 

1% 

Illinois American Water Company 

30% 

56% 

14% 

Missouri American Water Company 

12% 

87% 

1% 

Indiana American Water Company 

57% 

42% 

1% 

California American Water Company 

67% 

1% 

32% 

West Virginia American Water Company 

0% 

100% 

0% 

Arizona American Water Company 

80% 

20% 

0% 

New York (Long Island) 

American Water Company 

100% 

0% 

0% 

Kentucky American Water Company 

0% 

100% 

0% 

Tennessee American Water Company 

0% 

100% 

0% 

Virginia American Water Company 

1% 

49% 

50% 

Maryland American Water Company 

9% 

89% 

2% 

Iowa American Water Company 

18% 

82% 

0% 

Ohio American Water Company 

31% 

64% 

5% 

Michigan American Water Company 

100% 

0% 

0% 

New Mexico American Water Company 

100% 

0% 

0% 

Hawaii American Water Company* 

0% 

0% 

0% 

Texas American Water Company 

100% 

0% 

0% 

Total 

27% 

66% 

7% 

*Wastewater Only, No Source of Supply 

MAINTAINING INFRASTRUCTURE 

Ongoing attention to the maintenance, 

repair and development of water 

infrastructure is necessary to help ensure 

safe, clean water and efficient and 

sustainable water use. For example, water 

management through leak detection and 

repairs results in reduced water losses 

(and therefore, reduced energy use and 

cost). In areas where water resources 

are relatively scarce, then reducing water 

losses leads to the availability of more 

water for our customers. 



We perform leak detection surveys on 

an ongoing basis. Valves are regularly 

examined through acoustical checks 

and hydrants are inspected and tested 

for leaks. Aging facilities and pipes are 

regularly replaced to improve system 

performance and efficiency. 

All of our regulated states use acoustic 

leak correlators to pinpoint the 

location of leaks. 

TOTAL WATER WITHDRAWAL BY SOURCE 

Regulated Subsidiaries: Sources of Water Supply (2010) Ground Water Surface Water Purchased/Treated Water 

American Water 27% 66% 7% 

WATER 

WASTEWATER 

Regulated 

Subsidiaries 

(as of 12/31/2010) 

Drinking 

Water Systems 

Wastewater WASTEWATER Total Systems 

Systems 

Surface Water 

Treatment Plant 


Treatment 

Plant 


Wells 

Wastewater 

Treatment 

Plant 

New Jersey 

Pennsylvania 

Illinois 

Missouri 

Indiana 

California 

West Virginia 

Arizona 

New York 

(Long Island) 

Kentucky 

Tennessee 

Virginia 

Maryland 

Iowa 

Ohio 

Michigan 

New Mexico 

Hawaii 

Texas 

Total 

32 

60 

38 

10 

24 

26 

13 

15 

1 

2 

2 

21 

1 

2 

22 

1 

2 

0 

51 

323 

20 

6 

30 

3 

2 

8 

1 

6 

0 

2 

0 

0 

0 

0 

3 

0 

0 

2 

5 

88 

52 

66 

68 

13 

26 

34 

14 

21 

1 

4 

2 

21 

1 

2 

25 

1 

2 

2 

56 

411 

7 

37 

7 

6 

6 

2 

9 

2 

0 

4 

1 

1 

1 

1 

3 

0 

0 

0 

0 

87 

158 

78 

21 

15 

33 

125 

0 

40 

21 

0 

1 

18 

0 

4 

16 

1 

8 

0 

59 

598 

188 

118 

78 

36 

143 

181 

0 

102 

161 

0 

2 

33 

2 

7 

60 

3 

64 

0 

66 

1,244 

17 

6 

11 

4 

1 

6 

1 

6 

0 

2 

0 

0 

0 

0 

3 

0 

0 

2 

5 

64 

We are currently working towards creating the mechanisms needed to track and report on American Water’s Total Water Production, 

including Non-Potable and Reuse. 

metering 

Metering provides an accurate accounting 

of water flowing through the system, 

thereby helping to determine where 

losses and excess usage may occur. 

American Water’s practice is to meter all 

customers. In some cases, commercial 

meters on apartment buildings or other 

multi-tenant facilities may have been 

changed over to individual meters. Also, 

fire services may be equipped with flow 

indicators. Residential service meters are 

replaced after a predetermined interval, 

based on state guidelines. Larger meters 

are tested on a routine basis. On the supply 

side, all sources of supply meters are 

routinely tested and calibrated for accuracy. 

Substantially all of our regulated water 

customers are metered, allowing us to 

measure water usage. 



water quality 

At American Water, we meet or exceed all 

water quality standards established by the 

EPA and other regulatory agencies and 

conduct over 1 million tests each year. 

In addition to complying with extensive 

U.S. federal, state and local regulations, 

in the case of our Canadian operations, 

we also comply with Canadian laws and 

regulations. All of these regulations 

govern the protection of the environment, 

health and safety, the quality of the 

water we deliver, water allocation rights, 

and the manner we treat and discharge 

wastewater. We have consistently scored 

among the highest of all water companies 

in complying with these strict regulations. 

At our research laboratory in Belleville, 

Illinois, as well as at our local utility labs, 

we conduct more than one million tests 

each year. American Water is currently 

certified for more than 190 compounds 

for drinking water and more than 40 

compounds for wastewater, meaning we 

maintain accreditation from states to 

report the compounds. 

Drinking Water Quality and Compliance 

In the past several years, we have 

received more than 150 awards for 

superior water quality from regulators, 

industry organizations and environmental 

agencies. For 2010, we achieved a score 

of greater than 99.9 percent for drinking 

water compliance. According to the EPA 

statistics, American Water’s performance 

COMPLIANCE RATE PERCENTAGE 

Year Drinking Water Wastewater 

2010 99.9% 99.6% 

2009 99.9% 99.5% 

2008 99.9% 99.2% 

has been far better than the industry 

average over the last several years. In 

fact, in 2009, American Water was 23 

times better than the industry average 

for compliance with drinking water quality 

standards (Maximum Contaminant Levels) 

and 86 times better for compliance with 

drinking water monitoring and reporting 

requirements. 

As part of our commitment to water quality, 

we regularly communicate with customers 

on drinking water quality. In addition to 

convening customer education initiatives, 

we also mail Consumer Confidence 

Reports to our customers annually and 

make water quality information readily 

available on the internet. In 2010, there 

were no legal proceedings or incidents 

of violation regarding the impact of 

American Water’s products on customer 

safety and health with respect to the 

provision of water and wastewater services. 

Wastewater Quality and Compliance 

American Water’s current compliance 

with wastewater standards is greater 

than 99 percent with over 75 percent of 

the facilities we own or operate meeting 

their discharge requirements every day 

throughout the year. In 2010, we saw 

continued improvement in our wastewater 

performance. 

Partnership for Safe Water 

American Water is part of the Partnership 

for Water, a unique cooperative effort 

between the EPA, American Water and 

more than 200 water utilities throughout 

the U.S. The goal of the Partnership is to 

enhance water quality in ways that may 

go beyond current federal standards. 

Participation requires regular evaluation of 

all treatment processes and water quality. 

The evaluation process provides additional 

assurance and safety to American Water 

customers. To date, 67 of American 

Water’s surface water treatment plants 

have received Phase III certification— 

this is approximately one-third of the 

plants in the country to receive Phase 

III certification. In addition, 62 American 

Water plants have received the Five-Year 

Phase III award, while 40 have been 

awarded the Ten-Year Phase III award. 

MCL VIOLATIONS PER SYSTEM 

MONITORING AND REPORTING VIOLATIONS PER SYSTEM 

AVERAGE VIOLATIONS PER SYSTEM 

0.3 

0.25 

0.2 

0.15 

0.1 

0.05 

0 

2005 2006 2007 2008 2009 2010 

AVERAGE VIOLATIONS PER SYSTEM 

2.5 

2 

1.5 

1 

0.5 

0 

2005 2006 2007 2008 2009 


Source: U.S. Environmental Protection Agency Industry American Water 



WATER RECLAMATION AND REUSE 

Water reclamation is the process by which 

wastewater is cleaned using biological and 

chemical treatment so that the water can 

used again for non-potable purposes such 

as building maintenance, industrial uses, 

toilet flushing and irrigation. In areas where 

there are current and projected future 

water shortages, water reclamation is an 

important way to protect supplies as well as 

natural ecosystems from water withdrawal. 

American Water has established a 

successful track record of designing, 

implementing and operating water reuse 

systems across the US. Notable projects 

include: 

• Water and wastewater facilities: The 

Anthem, Arizona facility, which serves 

10,000 customers, includes a 100 

percent water reuse technology. Re-used 

water irrigates parks and recharges 

aquifers. The Fillmore Water Recycling 

Plant in California, a state-of-the-art zerodischarge 

wastewater treatment plant 

currently produces 1 million gallons 

of water that meets the standards for 

unrestricted reuse irrigation purposes 

• Residential buildings: American Water, 

through its Applied Water Management 

subsidiary, has worked with the Battery 

Park City Authority for ten years, 

pioneering water recycling programs 

in five residential buildings, including 

The Solaire, Tribeca Green, Millennium 

Towers, The Visionaire and Riverhouse. 

These five systems together save 

approximately 56 million gallons of water 

per year. A combined system for two new 

buildings is scheduled for completion 

later this year 

• Community Developments: Homestead 

at Mansfield in New Jersey is a 

residential development connected to a 

water reuse system that provides up to 

250,000 gallons per day of reclaimed 

water to irrigate landscaped spaces 

• Sports Facilities: Gillette Stadium, 

home to the New England Patriots, 

has a double piping system that treats 

wastewater from the stadium, saving 

250,000 gallons of water at every 

major event 

• Schools: The Copper Hill School 

in Raritan Township, NJ, recycles 

wastewater from school toilets and 

showers, saving the school about 

12,000 gallons of wastewater each day 

Protecting Watersheds and Habitats 

The American Water Environmental Policy 

calls on all operations to “sustain the 

environment through responsible business 

practices” including the protection and 

enhancement of biodiversity on the 

property that we own. For example, 

American Water implements the 

requirements of the Endangered Species 

Act at a number of environmentally 

sensitive locations. In Odgen Dunes, 

Indiana American Water has sponsored 

the planting of wild lupine to enhance the 

habitat for the Karner blue butterfly. In 

Monterey, California, we are developing 

alternative water sources to maintain 

minimum stream flows to protect the 

red-legged frog. In the Midwest, our water 

companies have erected osprey nesting 

platforms near waterways as a way of 

protecting this endangered species. 

Through our Environmental Grants 

program, American Water partners with 

local environmental groups to promote 

protection and stewardship of watersheds 

that impact our service areas. 

All environmental grant programs are 

implemented in conjunction with state 

and local environmental and civic groups. 

AMERICAN WATER WASTEWATER REUSE OPERATIONS 

This graph illustrates the geographical distribution and capacity of American Water’s major wastewater treatment operations with reported water reuse 

(including American Water owned and contract operations). American Water has water reuse operations in ten states (Arizona, California, Connecticut, 

Massachusetts, Maryland, North Carolina, New Jersey, New Mexico, New York, Rhode Island), and Canada with a total installed capacity of nearly 

21.5 MGD (about 9.1 percent of American Water's total wastewater capacity) and an average produced flow of nearly 11.2 MGD. The largest installed 

capacity is in Arizona followed by Maryland and California. In total there are more than 80 water reuse operations owned or operated by American Water. 

10 

CAPACITY (MGD) 

8 

6 

4 

2 

0 

Capacity (MGD) 

Produced (MGD) 

AZ 

9.65 

4.66 

CA 

2.56 

1.59 

CT 

0.08 

0.08 

MA 

0.51 

0.51 

MD 

4.50 

0.10 

NC 

1.53 

1.53 

NJ 

1.77 

1.77 

NM 

0.26 

0.26 

NY 

0.19 

0.19 

RI 

0.10 

0.10 

Canada 

0.37 

0.37 

Note: Production for the states of CT, MA, NC, NJ, NM, NY, RI and Canada are estimated based on the total capacity. 



The assessment of the success of the 

program is open to stakeholder review. 

For example, the Piasa Creek Watershed 

Project near Alton, Illinois, represents 

a ten-year commitment to reduce 

sedimentation in the watershed by using 

silt basins, dry dams, stream stabilization, 

land acquisition and other watershed 

protection techniques. Metrics on the 

success of this project are collected and 

published by the Great Rivers Land Trust. 

Compliance with the Endangered Species 

Act is required by submission of data to 

state agencies. More detailed information 

on the Piasa Creek project can be found 

by visiting our Wetlands case study. 

More about the American Water Environmental 

Grant program can be found on our 

Corporate Responsibility website at 

www.amwater.com/corporateresponsibility. 

WASTEWATER REUSE APPLICATIONS 

This graph illustrates the distribution of different types of reclaimed water utilization across America Water operations. The majority of the reclaimed 

water is utilized for non-potable applications such as irrigation, aquifer recharge, toilet flushing, industrial process water and cooling water. The 

utilization spans domestic, commercial and industrial reuse applications. Currently there is no utilization of reclaimed water for indirect or direct potable 

water reuse. 

60 

50 

40 

30 

20 

10 

0 

57 

NUMBER OF PLANTS 

26 

31 

5 

8 

Aquifer 

Recharge 

Irrigation 

Toilet 

Flushwater 

EMC (Industrial 

Process Water) 

Cooling 

Tower Make-up 

Note: There may be multiple types of reclaimed water utilization at one plant. 


“Our Environmental Grant Program 

offers funds for innovative, communitybased 

environmental projects that 

improve, restore or protect the 

watersheds, surface water and/or 

groundwater supplies in the 

communities we serve. The program 

launched with a pilot project in 

Pennsylvania, resulting in three grant 

awards, and has since expanded to 

19 states where the company owns 

water and wastewater utilities. 

“We ask applicants to address a 

source water protection need in the 

local community or a project that 

improves, restores or protects one or 

more watersheds. Since its inception, 

the Environmental Grant program has 

awarded almost $400,000 in grants, 

with projects ranging in scope from 

watershed cleanups, reforestation 

efforts, wellhead protection programs 

and water protection education. 

“In 2010, the Yardley Borough 

Environmental Advisory Council was 

awarded a grant to assist the borough 

in establishing a rain garden at the 

Orchard Hill basin. The project is 

reducing the impact of the residential 

development’s stormwater runoff on 

the local watershed. The rain garden 

is a landscaped area that contains 

native plants and vegetation, replacing 

lawn areas. It fills with water during 

rainstorms and allows the water to 

gradually filter into the ground instead of 

running off into storm drains.” 

Debra Vernon 

Manager of Corporate Responsibility 



perspective on: Environmental Performance 

Our business 


Committed to preserving and protecting 

Earth’s most precious resource. 

Environmental audits 

in 2010 cover over 

200 

treatment plants 

The Carmel River in Monterey, California 

is home to the red-legged frog and the 

steelhead trout. 

Reducing our environmental footprint 

American Water is committed to being a steward of the environment. We understand that our operations and 

activities have an impact on the environment, and it is our responsibility to minimize these impacts while 

providing affordable and reliable water and wastewater products and services to our customers. We have set 

aspirational goals related to our environmental performance. These include reducing our carbon footprint and 

waste by 50 percent over the long term. 

The American Water Environmental policy applies to all parts of the business for which we have control. 

The objective of this policy is to clearly outline the roles and responsibilities of each operating unit to support 

this effort. 



American Water’s Commitment: 

• Ensure compliance with all relevant 

environmental laws, regulations and 

standards 

• Compliance will be monitored and 

reported on a regular basis 

• Sustain the environment through 

responsible business practices which 

promote environmental stewardship 

with a holistic approach to the 

prevention of pollution 

• Promote environmental stewardship in 

our business offerings, and where our 

operations, activities or practices could 

impact the environment 

• Encourage our partners, suppliers, 

agents and contractors to adopt similar 

standards 

• Discuss our environmental 

performance with our stakeholders 

• Ensure efficient use of natural 

resources, including energy, in both our 

operations and during construction 

• Work to achieve a high level of energy 

efficiency and reduction of greenhouse 

gas emissions 

• Minimize resource consumption and 

waste production in capital projects 

and new construction 

• Partner with our communities to protect 

watersheds, develop sustainable 

water resources and promote water 

conservation and use efficiency 

• Promote recycling, reuse or energy 

recovery of wastes 

Each operating unit is responsible for 

managing its environmental impact 

in a systematic way through the 

implementation of an Environmental 

Management Plan that includes both 

regulatory requirements and stewardship 

opportunities 

environmental stewardship 

American Water complies with numerous 

federal and state regulations, developed 

under the Safe Drinking Water Act, the 

Clean Water Act, the Clean Air Act and 

other federal and state statutes. To ensure 

compliance with applicable regulations 

and track our environmental stewardship 

efforts, we employ an Environmental 

Management Plan system in tandem with 

an internal environmental audit program. 

Environmental Management Plans 

Our Environmental Management Plans 

outline regulatory requirements and 

environmental stewardship opportunities 

at each of our facilities. Specifically, these 

plans summarize environmental regulations 

such as safe drinking water, clean water 

and clean air that apply to a particular 

facility. These plans are developed at the 

system level and include facility-specific 

requirements and designation of the 

employees responsible for implementation. 

Environmental Management Plans are 

reviewed quarterly and updated as needed 

to include new requirements and changes 

in responsibility. 

Environmental Audits 

Through our internal environmental audit 

program we assess our environmental 

management plans, procedures and 

physical facilities. The audit program also 

assesses drinking water and wastewater 

services, and is intended to proactively 

identify issues and allow us to remediate 

them. Our goal is to audit all regulated and 

market-based operations at least once 

every five years (or more frequently, if 

possible). Over the last 3 years, American 

Water performed over 100 audits covering 

over 350 treatment plants at over 200 

drinking water and wastewater systems. 

Reducing GHG Emissions 

American Water is committed to lowering 

our GHG emissions per volume of water 

sold. To accomplish this goal, we plan to 

invest significant capital over the next six 

years to decrease our GHG intensity by five 

to eight percent through a combination of 

increasing pump efficiencies, purchasing 

cleaner generated energy sources, 

reducing our fleet and increasing the use 

of onsite solar and other alternative energy 

producing methods. 

In 2010, approximately 92 percent of our GHG 

emissions were from purchased electricity. 

The vast majority of energy utilized by 

water companies is consumed to pump 

water. At American Water, our research 

indicates that approximately 97 percent of 

our electricity consumption and 90 percent 

of our GHG emissions are the products of 

the water delivery process, which includes 

pumping water from its source (ground or 

surface water systems) to treatment and 

storage facilities and on to customers. 

Research has shown that the average 

“wire-to-water” efficiency of existing 

“in-field” water utility pumps is about 55 

percent. New installations are designed 

to achieve efficiency ratings of between 

76 percent and 82 percent. American 

Water sees this as a major opportunity to 

decrease its carbon footprint. By replacing 

or refurbishing older pumps, our studies 

have shown that pump efficiency can 

improve by as much as 20 percent. 

In 2010, we implemented a program 

to conduct wire-to-water testing at 

American Water locations targeted due to 

high energy use. The majority of this testing 

was completed in 2009 and 2010. In 2011, 

we will complete the efficiency data analysis 

and related capital planning and begin our 

capital investment program that will lead 

American Water to a path of greater pump 

efficiency. Upon completion of our planning 

and data gathering in 2011, we will begin 

to implement our pump replacement and 

refurbishment plan in late 2011. 

American Water uses a combination of 

natural gas, gasoline and diesel fuel in our 

operations. Natural gas is primarily used 

to heat our office buildings and treatment 

facilities. Gasoline and diesel are used in 

our fleet vehicles. Diesel is also used in 

our emergency generators. 



TOTAL DIRECT AND INDIRECT GREENHOUSE GAS EMISSIONS 

Year 

GHGe Total 

(Tonnes CO 2 

e) 

Total Emissions Intensity 

(# CO 2 

e/MG) 

Direct Emissions Intensity 

(# CO 2 

e/MG) 

Indirect Emissions Intensity 

(# CO 2 

e/MG) 

GHGe Intensity 

(yr on yr %) 

2007 

853,676 

4.44 

0.34 

4.10 - 

2008 

813,805 

4.42 

0.35 

4.07 

-0.3% 

2009 

780,302 

4.49 

0.37 

4.12 

1.5% 


800,655 

4.48 

0.36 

4.12 

-0.3% 

Fleet Efficiency 

About 5 percent of American Water’s GHG 

emissions come from our vehicle fleet, 

which is used to operate and maintain 

our water and wastewater systems. 

We continue to work with public utility 

commissions in the states in which 

we operate to obtain approval for the 

increased purchase of high-efficiency, 

hybrid and electric vehicles. While our 

success has been limited to several of 

the more progressive states, we will 

continue to push this initiative and expect 

to see increased success in the future. 

Currently, we have 37 hybrid vehicles and 

two natural gas powered vehicles, mainly 

in Pennsylvania, but also in New Jersey, 

California, Illinois and Iowa. We also 

recently initiated a “no idle” policy, which 

will decrease total fleet GHG emissions. 

Increasing Lighting Efficiency 

American Water has an active program 

to ensure that our facilities are operating 

with updated, energy efficient lighting 

technology. While lighting improvement 

projects are a good use of capital dollars, 

the impact on our carbon footprint will be 

minimal because lighting represents a 

small portion of our overall electricity use. 

Increasing Our Production 

of Green Power 

In 2005, American Water constructed 

what was, at the time, the largest groundmounted 

solar array east of the Rocky 

Mountains in New Jersey. Since then, we 

have expanded that system and installed 

an additional solar array at an adjacent 

facility. In 2010, these two facilities 

generated 864,667 kWh of green power 

GREENHOUSE GAS EMISSIONS BY TYPE 

GHGe INTENSITY (#C0 2 e/KGAL SALES) 

5.0 

4.5 

4.0 

3.5 

3.0 

2.5 

2.0 

1.5 

1.0 

0.5 

0.0 

2007 

Generators & Heating 

Vehicles 

and saved approximately one million 

pounds of CO 2 

emissions from being 

released. 

American Water is due to complete two 

capital projects in 2011 that will expand 

our solar capacity by approximately 240 

kW. In addition, American Water has plans 

to expand our solar capacity in 2012 and 

2013 by almost 2 megawatts (MW). 

To produce additional green power, we 

commissioned solar site surveys at 13 

American Water facilities across New 

Jersey. The surveys found numerous 

promising sites at which we will pursue the 

installation of solar photovoltaic systems 

2008 2009 2010 

Electricity 

in order to meet our goal. We are also 

exploring the generation of bio-fuels and 

bio-energy at our wastewater treatment 

plants to convert the incoming organic 

waste into less carbon-intensive 

green energy. 



SOLAR ARRAY ENERGY PRODUCTION 

Solar Array 2010 2009 

Electricity generated 864,667 kWh 818,000 kWh 

Increasing Our Purchase of Green 

Energy and Carbon Credits 

American Water has been a purchaser of 

green power for some years. One hundred 

percent of the 1,400,000 kWh of energy 

used annually at our Yardley, Pennsylvania 

plant comes from wind power. In 2009, 

this green wind energy supply saved 1.6 

million pounds of CO 2 

emissions from 

being released into the atmosphere. 

The following metrics are based on 

renewable energy used by American 

Water’s regulated businesses only. The 

solar energy usage is based on the 

electricity output of American Water’s solar 

generation. One hundred percent of the 

electricity produced by our solar generation 

is consumed by company facilities. The 

wind energy is purchased from a thirdparty 

vendor and is consumed at our water 

treatment plant in Yardley, Pennsylvania. 

RENEWABLE ELECTRIC GENERATION CONSUMED 

2010 2009 

Wind 1,406,208 kWh 1,375,104 kWh 

Solar 864,667 kWh 861,989 kWh 

Recycled Material 

A large number of products purchased 

by American Water are produced utilizing 

recycled materials. With respect to 

infrastructural items, all iron castings, 

whether ductile or other, are manufactured 

by melting ferrous scrap mixes, depending 

on availability and pricing. Such items 

would include ductile iron pipe and fittings, 

hydrants, valve bodies, curb and valve box 

castings, iron lids, etc. For our regulated 

business, buried infrastructure materials 

produced from recycled material accounted 

for 76 percent of the buried infrastructure 

purchases in 2010. 

A number of treatment chemicals also 

utilize recycled material in their production. 

These would include the ferrous and 

ferric salts (ferric sulfate and ferric 

chloride) which are manufactured using 

ferrous scrap. The remaining chemicals 

are produced using virgin materials. For 

2010, treatment chemicals produced 

from recycled material and used by 

our regulated business, accounted for 

11 percent of the treatment chemical 

purchases across American Water. 


perspective on: Workplace Performance 

Our A dynamic business team more 

than depends 7,000 strong. 

trust. 

In 2010, we introduced 

Healthy Solutions, 

a program to help improve 

health among employees 

and their families 

Our employees are our greatest asset and 

we depend on them to keep the water flowing 

each and every day. 

Investing in our people 

Every week, over 7,300 American Water employees interact with a portion of the 15 million customers that 

we serve. And behind the scenes, hundreds more are committed to making those interactions as positive 

as possible. 

Our employees are our most valuable resource—critical to our mission of providing safe, reliable water and 

wastewater services to the communities where we do business. They are our ambassadors, representing us 

in all states and provinces where we operate and the innovators who are helping us to achieve our vision of a 

sustainable water future. 

To meet our future goals, it is vital that we continue to invest in our people. That begins by building a culture 

of respect so that all people can perform to their potential. We have increased our focus on employee’s 

professional development and education, and are also providing the resources needed for employees to make 

good decisions about their health, safety and wellness. 



EMPLOYEE ENGAGEMENT AND DEVELOPMENT 

It is more important than ever to invest in 

our employees, strengthen their technical 

and leadership skills, and recognize 

them for delivering results that cultivate 

success. Our professional development 

program includes unlimited access to 

seminars produced by a leading continuing 

education center and its divisions. We 

offer employees access to more than 

11,000 seminars at more than 350 

locations and online training resources 

such as articles, job aids, video and audio 

conferences. American Water also provides 

a tuition reimbursement program to 

prepare employees to further their career 

development for current job responsibilities 

or to prepare for new assignments. We 

also provide financial assistance for 

undergraduate and graduate education. 

Additionally, American Water provides 

diversity, ethics, sexual harassment 

and employee orientation training. 

Employees also participate in operator 

licensing training to maintain certification 

appropriate to their job responsibilities. 

Of our approximate 7,000 employees, 3,700, or about 49 percent of our total 

workforce, are unionized and represented by 18 different unions. We have 84 

collective bargaining agreements in place with 18 different unions representing our 

unionized employees. 

TOTAL WORKFORCE BY EMPLOYMENT TYPE, EMPLOYMENT CONTRACT AND REGION 

Market-based 

Number of Employees 

Full Time 703 

Part Time 53 

Total 756 

Regulated 


Full Time 6,532 

Part Time 57 

Total 6,589 

All American Water 


Full Time 7,235 

Part Time 110 

Total 7,345 

The Leadership Challenge 

Last year, American Water established 

and rolled out the Leadership Challenge 

program, a two-day workshop based on 

the practices and behaviors of exceptional 

leaders. During the workshop, participants 

are given extensive feedback on their 

current leadership practices, and then 

compare this feedback to the practices 

of successful leaders. Designed for all 

levels of management, the workshop 

uses fast-paced, experiential exercises 

so that participants can learn about their 

strengths as a leader and how to enhance 

their abilities. 

The curriculum is based on the Five 

Practices of Exemplary Leadership: 

• Model the Way 

• Inspire a Shared Vision 

• Challenge the Process 

• Enable Others to Act 

• Encourage the Heart 

In 2010, 450 employees took part in 

30 different workshops. Feedback from 

participants was very positive and we will 

be expanding the program over time. 

Performance Management 

Over the last two years we have enhanced 

our performance and development 

management processes, creating 

stronger performance development 

reviews and guidance, and more accurate 

assessments. 

Based on feedback from our employees 

indicating a desire for a more aligned 

process, we recently merged our 

Performance Review with our Professional 

Development Review to better integrate 

how we consider past performance and 

make decisions about future investments 

in employee development. 



Our current performance review 

systems are manually driven, making 

statistics difficult to acquire. However, 

we do perform “spot check” audits 

and are confident that 90% or more of 

our 4,200 non-represented employees 

received an annual performance and 

development review in 2010. This 

represents 57% of our total workforce 

of over 7,000 employees. Our new 

systems, which we are currently 

implementing, will improve our ability 

to track this information for 2011 

and beyond. 

The goal of our Performance Review 

process is to provide our employees with 

the necessary direction and development 

guidance to ensure that they are 

successful. American Water’s expectation 

is that all non-exempt employees receive 

annual performance and development 

reviews. Collective bargaining agreements 

prevent American Water from conducting 

performance appraisals for union 

employees. 

We are in the process of establishing 

a comprehensive software tool that will 

allow us to further improve our process 

of setting employee targets and goals, 

reviewing achievement of those targets 

and goals, understanding the skills 

and capabilities of our employees, and 

making decisions on investments in 

new capabilities and skills. The tool will 

also enhance our succession planning 

capability, compensation review and talent 

management. 

Benefits and Compensation 

American Water strives to provide a 

competitive pay package that reinforces 

desired performance and attracts and 

retains the best people. The overall 

objective of the salary administration 

program is to compensate employees who 

contribute to the business goals of the 

company. Effective management of the 

compensation and salary administration 

programs is critical to our success. 

American Water pays salaries that are 

competitive with comparable organizations 

for positions of similar responsibilities. Our 

pay programs are designed to: 

• provide a framework for assigning 

positions to salary levels on a fair and 

consistent basis 

• establish and maintain salary ranges 

that are competitive in the marketplace 

• ensure that each salary decision 

is based on an assessment of an 

employee’s performance 

• support the company’s planning and 

budgeting process 

• ensure that salary related decisions are 

equitable, consistent and made without 

regard to race, religion, color, age, 

handicap, gender, national origin, sexual 

orientation or other protected categories 

In addition, we allocate a proportion of 

the funds available for salary increases 

specifically to addressing pay for 

performance. We discuss the distribution 

of these funds with the management 

representative body and follow clear 

guidelines to ensure they are allocated 

fairly and consistently. 

American Water’s compensation program 

is designed to align our business strategy, 

values and management objectives, and 

reinforce a performance culture. The 

company targets total cash compensation 

at the 50 th percentile of the market 

with greater earning opportunities for 

exceptional performance. Our philosophy 

is to pay for performance, rewarding 

employees in a manner commensurate 

with their individual contribution to meeting 

overall corporate goals. 

American Water offers a competitive 

benefits package including medical and 

dental care, vision care, life insurance, 

401(k) savings plan, wellness and tuition 

assistance. In addition, the company 

offers health care and dependent care 

spending accounts, which allow employees 

to set aside pre-tax dollars to pay for 

eligible medical and dependent care 

services. 

American Water believes in sharing our 

success with those who make it possible. 

In 2009, we launched the American Water 

Employee Stock Purchase Plan (ESPP). 

The ESPP gives full- and part-time, nonunion 

employees the chance to purchase 

common shares of American Water (AWK) 

stock at a 10 percent discount off the New 

York Stock Exchange (NYSE) price, through 

after-tax payroll deductions. 

Health, Wellness and Counseling 

American Water employees and their 

families benefit from our Employee 

Assistance Program, which offers a 

number of confidential, free resources 

to support employees facing everyday 

challenges or major life changes. The 

program’s counseling service provides 

professional, credentialed counselors via 

face-to-face or phone consultations to 

employees and their families in areas such 

as parenting and marital relationships; 

alcohol or drug addictions; and depression 

or grief. Online assistance is also available 

24 hours a day, seven days a week, and 

can be accessed from home or work. 

Through MY LIFE RESOURCE ONLINE, 

employees and their dependents have 

a comprehensive source of information 

and tools for life management skills 

including wellness programs for quitting 

smoking and weight management, national 

databases for colleges, distance learning 

centers, child and elder care facilities and 

attorneys and programs to create wills and 

trust documents. 

In 2010, American Water also introduced 

Healthy Solutions, a new benefit that 

helps employees and their families to 

maintain and improve their health. Available 

through the company’s new wellness 



website, Healthy Solutions provides health 

assessments, wellness challenges, 

health information, seminars, coaching 

and chronic condition management. 

Since its launch, 51 percent of 

American Water’s employees have logged 

on to the Healthy Solutions website, 

participated in activities, and earned 

wellness credits. 

Diversity and Inclusion 

At American Water, we do not condone 

unlawful discrimination and expect our 

employees to treat their colleagues with 

respect and integrity. We comply with 

all laws providing equal opportunity to 

persons without regard to race, color, 

religion, gender, sexual orientation, age, 

national origin, disability, military status, 

veteran status, marital status, citizenship 

status or any other protected category 

under all applicable law. 

As part of our desire to be an “employer of 

choice,” we strive to create a performancedriven 

culture where our employees can 

meet their potential at all levels. We hold 

American Water leaders accountable for 

achieving key diversity and inclusion work 

environments, and we judge not only 

an individual manager’s performance 

but also divisional and overall corporate 

performance, including any diversity 

objectives. 

In 2009, a mandatory diversity 

awareness training course was 

provided to American Water leaders 

to help them to better understand the 

business case for improved workforce 

diversity. We ran workshops for over 

150 senior leaders from all facilities to 

promote inclusive behavior. 

In 2010, we continued to support this 

effort by providing diversity training on a 

“by request” or an “as needed” basis. 

Diversity training was provided as part 

of the Affirmative Action Plan overview 

training at Pennsylvania American Water, 

one of our regulated state subsidiaries. 

And company-wide, we continue to 

incorporate diversity training into our new 

employee orientation program. 

Our diversity and inclusion strategy 

focuses on improving gender and 

cultural diversity at all levels of the 

company. Nationally, women comprise 

28 percent of the total workforce and 

23 percent of management. Three of 

the company’s eight board members are 

women, and there are five women on the 

twelve-member executive management 

team. Company-wide, ethnically diverse 

employees represent 17 percent of 

the total workforce, and 9 percent of 

management. 

Employee Turnover 

Over the years, American Water has 

leveraged our employee development 

programs, benefits and culture into a 

strong rate of employee retention. In 2009 

and 2010 we retained over 90 percent of 

our workforce. 

TOTAL NUMBER AND RATE OF EMPLOYEE TURNOVER BY AGE GROUP, GENDER AND REGION 

Market-based 


Percentage 

Male 154 80% 

Female 39 20% 

Total 193 

Breakdown by Age 

50 81 42% 

Regulated 


Percentage 

Male 309 57% 

Female 233 43% 

Total 542 


50 225 42% 

continued All American on the Water next page 


Percentage 

Corporate Male responsibility report 2010 463 63% 

58 

Female 272 37%

Total 542 


50 225 42% 



Percentage 

Male 463 63% 

Female 272 37% 

Total 735 


50 306 42% 

EMPLOYEE health and safety 

American Water recognizes the importance 

of health and safety as integral to our 

operations. We strive to provide a safe 

workplace for our employees and we hold 

our employees accountable for safety. 

Our health and safety programs, based 

on the goal of continuous improvement, 

are a sound investment protecting our 

employees, our customers and the public. 

Our comprehensive health and safety 

policy and practices are geared toward 

the prevention of workplace incidents and 

compliance with applicable regulations. 

Our safety programs have a number of 

elements and are developed in accordance 

with our Health and Safety Policy to address 

specific issues and needs within each 

operation. Our employees participate in 

ongoing operational safety education, 

including courses on such topics as 

defensive driving, work zone safety, 

hazardous chemical handling, confined 

space entry and fall protection, among 

many others. 

Safety programs and procedures developed 

under this policy include: 

• Supporting practices that are developed, 

reviewed and updated to provide guidance 

on safe performance of activities in the 

workplace and are reflective of changes in 

organizational, operational and regulatory 

needs 

• Strategy and priority development and 

implementation of safety improvements 

based on risk analysis of work places, 

work tasks and related potential injuries 

and incidents 

• Development of and measurement 

against, specific company safety 

performance targets and safety 

accountabilities for employees at all 

levels of the organization 

• Ongoing assessment and review of 

processes, activities and supporting 

safety programs to gauge effectiveness 

and identify opportunities for continued 

improvement 

• Consistency of implementation and 

compliance with Company and regulatory 

requirements 

• Defined and monitored contractor 

qualifications and requirements for safety 

performance in accordance with approved 

contract documents, applicable laws and 

regulations 

Health and safety topics defined in our 

collective agreements typically focus on 

safety-related issues within daily work 

environments. Health-related topics are 

typically not identified specifically in our 

collective agreements. However, this 

subject could be discussed in formal 

Safety Committee meetings. Some of our 

collective agreements define the scope and 

membership of those committees. 

Our safety performance continues to 

improve year over year. In 2010, our OSHA 

Recordable Injury rate (ORIR), which is a 

standard measure of occupational injuries 

and illnesses, improved by nearly 10 

percent over 2009. While American Water’s 

safety performance outperforms the 

industry average, as reported by the Bureau 

of Labor Statistics, our goal is to continue 

preventive efforts and programs that will 

continue to drive down the numbers of 

work-related injuries that our employees 

experience. 

Training for Workplace Safety 

A key component of our health and safety 

program involves the training of our 

employees. Well-trained employees who are 

familiar with potential hazards on 

the job and have knowledge of the 

protective measures and techniques 

that must be used in executing their 

tasks are a cornerstone of our injury 

prevention efforts. 

American Water’s health and safety training 

programs are based on extensive company 

practices and regulatory requirements as 

they apply to the work we perform. Each 

year, employees receive training delivered 

through many different vehicles. These 

include traditional classroom training, 

practical or “on the job” training, frequent, 

weekly informal meetings and outside 

vendor-provided training on specific 

applications or equipment. 

American Water has dedicated health 

and safety trainers who deliver much of 

this content to our employees each year. 

We also revise and develop new training 

programs on a continuous basis to reflect 

changes in the workplace or regulatory 

requirements. Per our database, in 2010 

a total of 4,023 employees received ORM/ 

safety training for a total of 26,762.25 

training hours, or an average of 6.7 hours 

per employee. 


perspective on: our customers 

Our Meeting business customers’ 

needs depends around on the trust. clock. 

For 2010, we distributed 

3.34 MILLION 

water quality reports 

to our customers 

A field service representative talks to a 

customer about ways to conserve water. 

communicating with OUR CUSTOMERS 

Our customers’ lifestyles and desires are evolving, but one fundamental remains constant. Our customers 

expect us to provide them with safe, clean and reliable drinking water. American Water is committed to 

meeting this fundamental need, and also to engaging with our customers to maintain strong relationships 

and work together toward a long-term sustainable water future. 

American Water is committed to providing communications to our customers that inform them about the 

quality of their water supply, the improvements to the water system infrastructure, and the availability of 

programs to help our customers manage their water use and costs. Our communications practices adhere 

to laws and regulations that govern our business, including consumer protection and privacy. In addition, our 

Code of Ethics governs marketing and communications to ensure customers receive accurate information on 

their water services. In 2010, we had no incidents of non-compliance with regulations and voluntary codes 

concerning our customer communications. 


perspective on: our customers 

American Water provides detailed solutions 

for customers to conserve water and 

lower their bill every month. Our customer 

outreach materials include: 

• Leak detection kits - When customers 

are concerned about a water leak, we 

direct them to leak detection information 

on our web site. If customers are not 

able to access our web site, we send 

them a leak detection kit. 

• “How-to” fact sheets - We provide 

important information to customers 

about their water and wastewater 

rates, how the water cycle works, and 

other questions related to water quality 

standards. 

• Bill inserts - Our bill inserts provide 

customers with information on payment 

options, water and wastewater rates, 

low-income assistance programs, 

maintenance schedules and water 

efficiency. 

American Water provides Consumer 

Confidence Reports on an annual basis to 

all our regulated customers to comply with 

state and EPA regulations. These reports 

describe water quality, and local water 

resources, and raise awareness of the 

need to protect drinking water supplies. 

In 2010, we distributed 3.34 million 

reports to our customers. The reports 

were posted on our corporate website, and 

customers can also search our website for 

water quality results for their area. 

Our regulated business also distributes 

billing notices for water and wastewater 

service to residential, commercial 

and industrial customers. In 2010, 

American Water mailed over 34 million 

service bills, which provide information 

on customers’ water and wastewater 

service usage. American Water received 

3,428 formal or informal complaints to the 

various state public utility commissions, 

or less than one percent (0.010) of 

the total bills sent. Of these, 956 were 

collections complaints (typically the 

customer is delinquent on their bill), 1,234 

billing complaints (typically the customer 

does not agree with the usage and/or 

the amount of the bill), and 1,238 other 

complaints, which are typically servicerelated. 

These can include field service 

issues, water quality issues, concerns 

about sewer owned and managed 

contracts, and water loss control, 

among others. 

American Water Resources, a segment 

of American Water’s market-based 

operations, provides residential, 

commercial and municipal customers with 

service line protection programs. In 2010, 

the total number of formal complaints 

received comprised less than one percent 

(0.25 percent) of all claims processed. Of 

these, the number of customer complaints 

in 2010 that were forwarded to public 

utility commissions in the states where the 

company operates was also less than one 

percent (0.10 percent) of all the claims 

processed. 

Currently, we do not have a means of 

tracking response times across our 

various state subsidiaries, however, we 

do measure overall customer service 

satisfaction. 

In 2010, the American Water Call Center handled approximately 4.3 million 

calls and achieved first-contact resolution approximately 82 percent of the time. 


perspective on: Supply Chain Performance 

Our Creating business partnerships 

depends based on trust. on trust. 

We are committed to 

diversity 

in our choice of suppliers 

Virginia American Water team members 

A responsible approach to the supply chain 

American Water is committed to environmental performance and responsible business practices in all its 

endeavors and applies this practice in every part of the water and wastewater utility supply chain. We have 

several practices to manage the ethical, social and environmental impacts of our suppliers. 

We are also committed to working with supplier companies that are owned by minorities and women. Our 

supply chain managers work with business leaders, trade associations and community-based organizations 

that represent the interests of diverse businesses. 


perspective on: Supply Chain Performance 

STRATEGIC SOURCING AND SUPPLIER GUIDELINES 

American Water has implemented a 

strategic sourcing process in working 

with any potential supplier. As part of this 

process, we assess what stakeholders 

will be affected, if minority suppliers 

exist for the product/service, and if the 

supplier meets other American Water 

requirements. 

Human Rights Screening 

We are committed to supporting human 

rights and we strive to create an 

environment of respect, integrity and 

fairness for our employees and customers 

in all our business locations. We expect 

that all our business partners will operate 

in the same manner. We inquire within our 

RFP process whether our suppliers have a 

corporate responsibility policy or program 

and ask in particular whether they have 

received notice of any violations related to 

the environment, labor, health and safety, 

or other matters from any government or 

governmental agency in the past seven 

years. If the suppliers’ response includes 

any violations we further inquire as to the 

extent of the violation and make a decision 

as to whether we will proceed with that 

specific supplier. In 2010, no suppliers 

reported any violations related to human 

rights violations. 

purchasing policies 

American Water’s Procurement Policy 

provides a process for the procurement 

of products and services through the 

use of professional purchasing and 

contracting practices. The process 

aims for administrative efficiencies and 

effective management of the consolidated 

purchasing power of the company to 

provide products and services at the 

best value. 

supplier diversity 

American Water strives to identify and 

include diverse suppliers (women, 

minority, disabled veterans and 

small business enterprises) from the 

communities we serve when soliciting bids 

for products and services. Our Supplier 

Diversity Policy guides each functional 

area of American Water to ensure that 

qualified diverse suppliers are given an 

equal opportunity. 

Our Supply Chain employees belong to 

organizations and committees devoted to 

enhancing diverse supplier opportunities 

within the water industry. In addition, our 

Supply Chain team attends networking 

events designed to connect our needs 

with the products and services offered by 

diverse suppliers. Every bid solicitation 

involves a comprehensive search for 

qualified diverse suppliers to include, 

and if competitive, to award business. 

Expanding the diversity of our supplier pool 

to reflect the communities we serve allows 

American Water to better understand 

customers’ needs in these markets. 


CASE STUDIES 

Our business 


Applying our experience and 

expertise to a variety of projects. 

Meeting the 

UNIQUE NEEDS 

of the customers and 

communities we serve 

Kevin Kruchinski, Kentucky American Water 

Community partnerships 

The following case studies help to illustrate some of the specific local challenges that American Water has 

worked to address in partnership with community stakeholders. They illustrate how we are tackling some 

of the urgent need to replace aging infrastructure, invest in more efficient use of increasingly scarce water 

resources, and understand long-term community needs for water and wastewater management. 


CASE STUDIES 

The Fillmore Water Recycling Plant 

Water recycled at the Fillmore Water Recycling 

Plant irrigates schools, landscape, city parks 

and green areas throughout Fillmore. 

In response to the need to dramatically 

improve the quality of treated wastewater 

discharges into the Santa Clara River, the 

city of Fillmore, California, contracted with 

American Water to build a new, state-ofthe-art 

water recycling plant that would 

end the practice of river discharges and 

enable development of a full-scale water 

reuse system to benefit many areas of 

the town. 

The result is a facility that meets the 

stringent requirements of federal and 

state regulations as a zero-discharge 

facility and recycling program for irrigation 

and groundwater recharge. 

The plant’s current irrigation system 

provides 200,000 gallons per day to 

two public schools, the Two Rivers Park 

and other green areas in Fillmore. About 

800,000 gallons per day are discharged 

to percolation ponds and an underground 

effluent disposal system that provides 

groundwater recharge. The irrigation 

system has reduced the use of potable 

water sufficiently enough to allow the 

city to postpone drilling a new well and 

has helped preserve its limited supply of 

quality potable water. 

In 2010, American Water was 

recognized for designing, building and 

operating the Fillmore Water Recycling 

Plant with a Project Merit award in the 

2010 Environmental Business Journal 

Business Achievement Awards. 

Central Kentucky Water Supply Solution 

The plant was constructed to be able to produce 

up to 20 million gallons of water each day. 

In a region already impacted by drought, 

Kentucky American Water has developed an 

innovative solution to address current and 

future water needs. In Central Kentucky, 

serious droughts in 1999 and more 

recently in 2007 led to restricted water 

use by customers for extended periods. 

Future projections indicated that by 2030, 

demand for water will outpace the region’s 

uncertain supply. 

In order to address the water challenges 

of Central Kentucky, we explored more 

than 40 infrastructure and environmental 

plans before selecting the best option. Our 

resulting project plan was to design, build 

and now operate a water treatment plant, 

water storage tank, booster pump station 

and 31-mile pipeline. The Kentucky Public 

Service Commission identified the 

project as the most effective and timely 

solution to supply issues facing Central 

Kentucky. 

In 2010, only two years after breaking 

ground, the project became fully operational. 

The new 20-million-gallon-per-day water 

treatment plant is designed to treat surface 

water drawn from the Kentucky River. 

Once treated, the water continues through 

the pipeline to the booster pump station 

and then reaches our existing distribution 

system in Lexington. Kentucky American 

Water’s environmental management 

plan ensured a sensitive approach to 

construction, avoiding any blasting by 

trenching under the North Elkhorn Creek 

to minimize impact. 

White Tanks Mountains Water Treatment Facility 

White Tanks Regional Water Treatment Facility 

saves 3 billion gallons of groundwater per year. 

For decades, residents and businesses in 

the greater Phoenix, Arizona, region had 

relied on ground wells for most of their 

water needs. This overdependence on 

groundwater has led to a steady depletion 

of the area’s local aquifers, negatively 

impacting the local ecosystem and 

potentially introducing new water costs 

to the area’s residents. A new solution 

was needed in order to assure long-term, 

reliable water as well as to meet the local 

area’s goal of groundwater “safe yield” 

by 2025. Safe yield is achieved when 

groundwater is pumped at the same rate 

that it is naturally replenished. 

With a goal of developing an 

environmentally sustainable solution to 

the area’s water needs, regional water 


CASE STUDIES 

providers and local government leaders 

worked together in 2001 to develop a plan 

to reduce the need to pump groundwater 

by making greater use of Central Arizona 

Project (CAP) surface water. The CAP, a 

336-mile canal which carries Colorado River 

water, is renewed each year from rain and 

snowfall in the Rocky Mountains. 

As a result of the 2001 planning process, 

Arizona American Water began the design, 

permitting and construction of the White 

Tanks Regional Water Treatment facility in 

2002. We started construction in 2007 and 

began delivering water to the community in 

2009. Using CAP surface water, the facility 

enables more than three billion gallons of 

water to remain in the ground each year. 

With future expansions, it could save 

almost 18 billion of groundwater annually. 

This treatment plant is a significant step 

in achieving the area’s long-term goal of a 

sustainable water strategy. 

The Blendville Water Treatment Plant 

Construction of the building foundation that will 

house the ultraviolet disinfection system. 

Missouri American Water improved and 

expanded its Blendville Water Treatment 

Plant to meet water quality regulations and 

the growing demands of residents within 

the Joplin, Missouri, water system. 

The plant rehabilitation not only addressed 

the outdated and worn equipment that had 

outlived its useful life, but also responded 

to growing capacity issues. Demand had 

been found to be increasing by 2.3 percent 

annually. 

Expanded from 16 million-gallons-perday 

(mgd) to 21.5 mgd, the rehabilitated 

Blendville plant ensures reliable water 

service for the region. Plant improvements 

include on-site hypochlorite generation, 

eliminating the need for gas chlorine 

storage and delivery—a major safety 

benefit since the plant is located near a 

residential neighborhood in the middle of 

the Blendville community. 

The Blendville plant is the first plant in 

Missouri to use ultraviolet disinfection 

for drinking water, a natural and costeffective 

process that enhances water 

quality assurance. The plant also has the 

highest rated plate settlers, which are 

water clarification tools, for drinking water 

treatment. Other project improvements 

included upgrades in the electrical system, 

filter systems and intake systems. 

Missouri American Water worked with the 

local community throughout the project 

planning phase to ensure the project 

addressed a full range of concerns and 

needs, including the need to provide 

uninterrupted service throughout the entire 

project rehabilitation. 

New Jersey American Water Infrastructure 

Swimming River water treatment plant clarifiers. 

New Jersey American Water serves 18 of 

the 21 counties in New Jersey, a densely 

populated state experiencing rising water 

demand due to continued population 

growth. That demand has recently been 

exacerbated by a trend of unseasonably 

hot summers. 

American Water is addressing New 

Jersey’s current water challenges by 

expanding water capacity and upgrading 

infrastructure. We are currently increasing 

the capacity of our water storage tank in 

Monmouth County and also increasing 

the diameter of the 9.5-mile pipeline 

from the water treatment plant to the 

tank through our existing service area. 

In the longer term, we will be investing in 

a larger storage system to improve the 

water pressure consistency in the water 

distribution system. 

In Short Hills, construction of the new 

Canoe Brook Water Treatment Plant is 

underway to replace the current plant, 

which dates back to the 1920s, and 

enhance the water quality that comes 

from the Canoe Brook reservoir. With 

environmentally sensitive design including 

premium efficiency pump motors, high 

efficiency lighting fixtures and use of 

natural lighting and water efficient 

plumbing fixtures, LEED Certification for 

the site is currently under review. The site 

has also been designed to minimize its 

environmental footprint by protecting local 

wetlands and wildlife. 

Throughout the state we are working with 

schools and community organizations to 

increase awareness of the need for water 

conservation and infrastructure renewal. 

For example, this year we partnered with 

Scholastic in a contest that challenged 

more than 13 thousand classrooms to 

create music videos about the value of tap 

water and the importance of conservation. 


Metrics 

Measuring our performance 

This section provides additional metrics and performance 

indicators, complementing the performance indicators provided 

in the Our Performance section. Where possible we provide data 

to show performance over time. 


metrics 

ethical performance metrics 

In 2010 there were no confirmed instances 

of corruption including criminal conduct 

such as bribery or extortion. 

Compliance with Code of Ethics 

In 2010 we had 217 investigations related 

to our Code of Ethics. Of these, 57 percent 

resulted in “action taken” in the categories 

of discrimination, policy issues, sexual 

harassment and theft of time. The average 

time to close investigations was 49 days. 

Competitive Behavior 

American Water’s regulated businesses 

are, by their very nature, a natural 

monopoly regulated by the Public Utilities 

Commissions in the states in which the 

company operates. We are not aware 

of any legal actions for anti-competitive 

behavior, anti-trust, or monopoly practices 

in 2010. 

American Water became a publicly traded 

company on April 23, 2008. 

Environmental Performance Metrics 

Material and Chemical Use 

Although American Water uses a variety of 

chemicals in the production of safe water, 

for our 2010 reporting we have chosen to 

focus on gaseous chemicals listed in the 

Chemical Facility Anti--Terrorism Standards, 

specifically, chlorine, ammonia and sulfurdioxide. 

These three chemicals are subject 

to higher levels of security due to potential 

airborne security risks. 

In addition to developing and implementing 

site security assessments and plans 

to minimize risk associated with these 

chemicals, we seek to identify and utilize 

inherently safer alternatives, whenever 

possible. This may include on-site 

generation of chlorine, use of liquid 

hypochlorite, or liquid or solid forms of 

ammonia. In all cases, there are tradeoffs 

between liquid and gas chemicals 

—on transportation, application and the 

resulting water quality. American Water 

takes these decisions seriously and 

carefully weighs all the options to produce 

the highest-quality water in the most 

environmentally responsible manner. 

MATERIAL AND CHEMICAL USE 

Chlorine: 27.24 lbs/MG Produced 

Ammonia: 2.93 lbs/MG Produced 

SO2: 

0.30 lbs/MG Produced 

DIRECT ENERGY CONSUMPTION 

Energy Source 2010 2009 

Natural Gas 8.74 therms per million gallons (MG) of water produced 9.64 therms per MG of water produced 

Gasoline 6.85 gallons per MG of water produced 6.37 gallons per MG of water produced 

Mobile Diesel 2.18 gallons used per MG of water produced 2.01 gallons used per MG of water produced 

Stationary Diesel 1.49 gallons used per MG of water produced 0.62 gallons used per MG of water produced 


metrics 

DIRECT ENERGY CONSUMPTION (ENERGY USE IN BTU EQUIVALENT) 

Energy Type 2010 2009 

Electricity 78.55% 

Natural Gas 8.37% 

Gasoline 8.20% 

Diesel 4.88% 

78.90% 

9.57% 

7.91% 

3.62% 

TOTAL DISCHARGE BY QUALITY AND DESTINATION 

Market-based 

Subsidiary: 

Infra and non 

infra assets 

in 2010 

DW 

Systems 

WW 

Systems 

Total 

Systems 

Surface 

WTP 

Ground 

WTP 

Ground 

Water 

Wells 

Waste 

WTP 

Wastewater 

Capacity 

(MGD) 

Total 

Volume 

Treated 


(Mgal) 

Secondary 

Treatment 

Treated 


(Mgal) 

Tertiary 

Treatment 

Treated 


(Mgal) 

Wastewater 

Volume Treated 

in 2010 (Mgal) 

CSG 

67 

178 

245 

13 


39 

213 

4,240.8077 

45,647.66 

44,793.22 

12,347.21 

37,477.85849 

MSG 

31 

19 

50 

1 

22 

59 

9 

20.69 

3,423.816 

3,421.29 

3,008.72 

3,458.648608 

Totals 

98 

197 

295 

14 

45 

98 

222 

4,261.50 

49,071.48 

48,214.51 

15,355.92 

40,936.51 

There are a few pre-treatment industrial facilities not counted in the overall volume of wastewater treated. Approximately 98% of the wastewater has had at 

least secondary treatment and a little over 31% has had tertiary treatment. Most of these systems are operated under contract (not owned) by American Water 

and therefore the company does not have the opportunity to adjust the level of treatment. 

NUMBER OF EMPLOYEES 

Market-based 

Regulated 

Total 

Full Time 703 

6,532 

Part Time 53 

57 

Total 756 

6,589 

7,235 

110 

7,345 


metrics 

TOTAL NUMBER AND RATE OF EMPLOYEE TURNOVER BY AGE GROUP, GENDER AND REGION 

Market-based 


Percentage 

Male 154 80% 

Female 39 20% 

Total 193 


50 81 42% 

Regulated 


Percentage 

Male 309 57% 

Female 233 43% 

Total 542 


50 225 42% 



Percentage 

Male 463 63% 

Female 272 37% 

Total 735 


50 306 42% 

Employee Female Representation 

Percentage 

Total Workforce 28% 

Women in Management 23% 

Women on the Board of Directors 42% 

Employee Ethnicity Representation 

Total Workforce 17% 

Management 9% 


metrics 

EMPLOYEE SAFETY PERFORMANCE 

Division 

OSHA Recordable 

Injury Rate 

Improvement 

over 2009 

Lost Workday 

Case Rate 

Improvement 

over 2009 

Regulated Business 4.17 10.7% 1.16 

Market-based Business 1.87 -92.8% 0.79 

American Water Total 3.85 9.8% 1.10 

-3.6% 

4.8% 

-0.9% 

our customer metrics 

Customer Satisfaction 

American Water conducts customer 

surveys to understand our customers’ 

needs and how our services are meeting 

their expectations. Our 2010 customer 

service survey showed that 90 percent of 

our customers are “somewhat,” “very,” 

or “extremely satisfied” with the service 

they are receiving from American Water. 

The results were based on a total of over 

6,000 interviews conducted in 15 of our 

regulated states. 

Our subsidiary, American Water Resources, 

providing service line and plumbing 

protection programs, also surveyed 

customers in 2010. The results showed 

that 92 percent of customers were 

“satisfied” or “very satisfied” with the 

protection services provided. In 2011, 

we are continuing to further enhance the 

customer experience with the contractors 

in the American Water Resources network. 

In 2010, there were no legal proceedings 

or incidents of violation regarding the 

impact of American Water’s products 

on customer safety and health with 

respect to the provision of water and 

wastewater services. 

Revenue collection and percent of 

accounts delinquent or in arrears 

In 2010, the percent of customer accounts 

which were delinquent or in arrears in 

excess of 30 days averaged 9.97 percent 

per month for American Water’s regulated 

operations, which serve residential, 

commercial and industrial customers. 

The Homeowner Services Group, a 

segment of American Water’s marketbased 

operations, serves residential, 

commercial and municipal clients. In 

2010, the Homeowner Services Group 

provided approximately 835,000 service 

line protection contracts to its customers. 

Of those contracts, 6 percent were 60 

days or more in arrears on payment. 


metrics 

AMERICAN WATER MONTHLY RESIDENTIAL SALES PER CUSTOMER 

Seven Largest State Subsidiaries 

9,100 

150% 

8,600 

140% 

8,100 

130% 

RESIDENTIAL SALES (GALLONS / CUSTOMER / MONTH) 

7,600 

7,100 

6,600 

6,100 

5,600 

5,100 

4,600 

4,100 

120% 

110% 

100% 

90% 

80% 

70% 

PERCENTAGE OF TRENDLINE AT DEC. 2001 

3,600 

60% 

3,100 

Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 

50% 

Monthly Usage per Customer 12-month Running Average Trendline - 12-month Running Average 


ABOUT THIS REPORT 

This is American Water’s first biennial 

corporate responsibility report. This 

report was published in June 2011 

and covers our corporate responsibility 

performance for the 2010 Fiscal Year, 

which ran from January 1 to December 

31. American Water has previously 

published a Corporate Responsibility 

Brochure as well as responses to 

a set of Global Reporting Initiative 

(GRI) G3 metrics, but going forward 

this performance information is being 

integrated into regular corporate 

responsibility reporting. 

The data in this report covers all of 

our regulated operations and where 

relevant, we include data from our 

market-based businesses as well. 

We have used the GRI G3 

Sustainability Reporting Guidelines to 

inform the development of this report. 

As part of this effort, we used GRI’s 

Reporting Principles of materiality, 

sustainability context, stakeholder 

inclusiveness and completeness 

in selecting content for the report. 

Additionally, we used the Interfaith 

Center on Corporate Responsibility 

Liquid Assets report to guide reporting 

and indicators specific to the water 

industry. We are self-declaring this 

report at GRI Application Level B. 

American Water did not use an external 

agency to audit the content of this 

report; however, the data contained 

in this report was generated using 

systems audited by our internal 

audit staff. 

Preparing this report is a valuable 

opportunity for us to assess 

and improve upon our corporate 

responsibility progress and 

performance. To continue to do so, 

we welcome your feedback. 

Write: 

Debra Vernon 

Manager of Corporate Responsibility 


1025 Laurel Oak Road 

Voorhees, New Jersey 08043, USA 

Email: 

Debra.Vernon@amwater.com 

GRI Index: 

To view the GRI Index in its entirety, 

please visit www.amwater.com/GRI 

www.amwater.com • NYSE: AWK 

American Water Works Company, Inc., together with its subsidiaries, is referred to as American Water. 

“American Water” and the star logo are the registered trademarks of American Water Works Company, Inc. All rights reserved.

AMER0838_CR Report 2010_8_23 - American Water

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