AMER0838_CR Report 2010_8_23 - American Water

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
Corporate responsibility report 2010 9