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                 Analyst conference call, Monday Oct 29, 2001.

                             American Water Works

                            Moderator: Jim Harrison
                               October 29, 2001
                                 1:00 p.m. MT

Operator:        Ladies and gentlemen thank you for standing by. Welcome to
                 the American Water Works Company, Inc. third quarter results
                 conference call. At this time, all participants are in a
                 listen-only mode. Later we will conduct question and answer
                 session. At that time, if you have a question, you will need
                 to press the one followed by the four on your telephone. As a
                 reminder this conference is being recorded Monday, October
                 29, 2001. A Post View replay of this conference will be
                 available beginning today at 4:00 pm eastern and running
                 through November 5. To access the Post View replay, you will
                 need to dial 800/633-8284 and enter reservation number
                 19805637. I would now like to turn the conference over to Jim
                 Harrison, Vice-President of Investor Relations. Please go
                 ahead, sir.

Jim Harrison:    Good afternoon. Thank you for participating in this
                 conference call to review our financial results for the third
                 quarter and to those of you listening to the webcast,
                 welcome. I'm Jim Harrison, Vice-President of Investor
                 Relations. Joining me today is Ellen Wolf, our Chief
                 Financial Officer. After I complete some preliminary matters,
                 Ellen will conduct the remainder of the call. Those of you
                 participating on the call should have received a copy of the
                 press release and the financial information. Anyone who did
                 not, you can call Kim Oliver at 480/614-3002, and she will
                 fax it to you. The information can also be found on our
                 website www.amwater.com. Participants or those listening to
                 the call are asked to be aware that forward looking
                 statements made during the call are based on current
                 information and expectations. Those statements are subject to
                 risk and uncertainty that may cause the actual results to
                 differ. It's for that reason, we advise that reference be
                 made to the disclosure language located at the bottom of the
                 press release for an explanation of some of the factors that
                 could impact forward looking statements. With those
                 preliminary matters completed, I'll turn the call over to

Ellen Wolf:      Thank you Jim. As noted in our press release, net income from
                 operations for the third quarter was $62.6 million or 63
                 cents a share excluding one-time amounts that I'll talk about
                 in a minute. These third quarter results exceeded the 51
                 cents per share earned in the third quarter of 2000 where we
                 had experienced cooler temperatures and more frequent
                 rainfall than is normal for that time of the year. Water
                 sales throughout most of our service areas returned to more
                 historical levels except for our southeast region which
                 continued to experience frequent rainfalls during the third
                 quarter. Total gallons sold for the regulated operations were
                 102 billion for the third quarter versus 99.5 billion for the
                 same time last year. Our third quarter results were also
                 impacted by some one-time transactions which are shown on the
                 income statement. There are two items. First, expenses
                 incurred to negotiate our agreement with RWE for their
                 purchase of all of the company's common stock resulted in a
                 10 cents per-share charge. These expenses were offset by a
                 three cent per-share net gain on a sale which occurred at the
                 end of September of our water assets serving the city of
                 Salisbury, Massachusetts.

                 Now to talk about the individual components. On revenues.
                 As we had mentioned in our release, revenues for the
                 quarter increased $31 million to reach $395 million. This
                 represents an 8.5 percent improvement above the $364
                 million realized during the third quarter last year.
                 Factors contributing to this improvement were improved
                 sales, continued customer growth, and rate increases. The
                 addition of more than 40,000 customers since September 30,
                 2000 resulted in 2.5 billion gallons of additional sales
                 representing an increase of 2.5 percent gallons. This
                 improvement accounted for almost $10 million of the
                 revenue improvement. Revenues from rate increases
                 accounted for the remaining $21 million of that increase.
                 Ten rate increases were implemented between September 30,
                 2000 and September 30, 2001. The two most significant rate
                 increases were for approximately $12 million, which was
                 authorized in Missouri, and $5 million, which was
                 authorized in Illinois.

                 On the expense side, an increase of $12.5 million or 8.1
                 percent in operation and maintenance expenses for the
                 third quarter of this year over the third quarter last
                 year was primarily driven by the results of a $5 million
                 increase in our production costs such as power, purchased
                 water, and chemicals. However, on a per-customer O&M
                 expense basis for the 12 months ended September 30, 2001
                 we were only up 3.5 percent from per customer O&M for that
                 12 months ended. Operating margins of 33.5 percent in 2001
                 were virtually unchanged from the 33.4 percent in 2000. We
                 are making significant progress with the completion of our
                 projects to consolidate customer service and financial
                 functions of the company. Our national call center became
                 operational last quarter and now provides customer service
                 to about half of the total customer base for American
                 Water Works. The scheduled completion date for that
                 project is the end of 2002. Last month, the beginning of
                 September, we began operations of our shared services
                 center that completes many of the financial functions of
                 the company such as payroll, vendor reimbursement,
                 accounting, and rate case preparation on a consolidated
                 basis. That project will be completed by the end of this

                 As noted during our discussion of increased revenues, rate
                 increases provided a significant contribution to improved
                 quarterly results. Four additional rate increase requests are
                 pending, which if approved as filed, will produce 55 million
                 in additional revenue. A $39 million request by our
                 Pennsylvania subsidiary and a $13 million request by our
                 Indiana subsidiary account for more than 95 percent of the
                 outstanding requests. Decisions on these requests are
                 anticipated in January 2002 for Pennsylvania and July 2002
                 for Indiana.

                 In a moment, I'll provide some updated information on the
                 Citizens, Azurix North America, and RWE acquisitions. First
                 I'd like to take a moment to provide additional details
                 regarding our other growth projects. The addition of more
                 than 40,000 customers to our regulated subsidiaries that was
                 mentioned earlier during the revenue increase discussion
                 resulted from the completion and integration of eight
                 different acquisitions since September 30, 2000, and internal
                 growth from projects to extend existing distribution systems.
                 This type of growth will continue as consolidation of the
                 water industry occurs. We also have 23 acquisitions in
                 various states of completion other than the acquisition of
                 the water and wastewater assets owned by Citizens. These
                 acquisitions will add another 40,000-plus customers to our
                 regulated customer base and approximately $6.5 million in
                 additional annual revenue.

                 An update on our contract management business. In September,
                 we completed the acquisition of the remaining interests of
                 our partnership in a joint venture with Environmental
                 Management Corporation. The joint venture provided operating
                 services for municipally owned water and wastewater systems
                 in the Midwest under long-term contracts. Sole ownership of
                 this joint venture continues to strengthen our credentials as
                 an operator of water and wastewater systems. As discussed in
                 the press release, we are moving forward with completion of
                 the Citizens transaction and anticipate closing on that
                 transaction prior to the end of this year. However,
                 procedural delays due to appeals filed with the California
                 Public Utility Commission have delayed closing again at least
                 until the end of this year.

                 We continue to move forward in our acquisition with the
                 Azurix North America and anticipate the closing of that
                 transaction in November. As it relates to approvals for the
                 RWE agreement, we've identified 14 states that we believe
                 require approval. These states are Arizona, California,
                 Connecticut, Illinois, Kentucky, Maryland, New Hampshire, New
                 Jersey, New Mexico, New York, Ohio, Pennsylvania, Virginia
                 and West Virginia. We also will need approval in Connecticut
                 and New Hampshire for our transaction with Kelda Group and
                 our sale of the New England properties to that organization.
                 In five other states, we will be filing advisory letters.
                 These states are Hawaii, Iowa, Missouri, Tennessee, and

                 That concludes my prepared remarks at this point. Operator,
                 you can now open the call for any questions.

Operator:        Ladies and gentlemen, we will now begin the
                 question-and-answer session. If you have a question, please
                 press the one followed by the four on your telephone. You
                 will hear a three-tone prompt acknowledging your request. If
                 your question has been answered and you wish to withdraw your
                 polling request, you may do so by pressing the one followed
                 by the three. If you are using a speakerphone, please pick up
                 the handset before entering your request. Once again, if you
                 do have a question, please press the one followed by the four
                 at this time. Once again if you do have a question, please
                 press the one followed by the four. Sean Dany with Gruss
                 Asset Management, please go ahead.

Sean Dany:       Yes. Could you please give us a brief picture of what the
                 response has been to the RWE transaction since you guys
                 announced it - I mean from the states?

E. Wolf:         We've not met with any of the states individually. I can talk
                 to you about our shareholders who are very pleased with the
                 transaction. In terms of the individual states, we'll be
                 doing our filings over the next month or so. We'll have a
                 better idea at that point.

S. Dany:         Are there any states which you expect to represent sort of
                 the gating approval - that have longer approval processes
                 than other states?

E. Wolf:         There are some states--each state has a different timeframe
                 in which they must rule or approve the transaction. Some
                 states have absolutely no time limits and other states have a
                 two-month period and some states have a year to look at the
                 transaction. We've looked at all of those historically. There
                 is not one that I would say could delay us beyond any others.
                 California, as you know, we're heading into our second year
                 with that approval and it did take close to two years to get
                 that approval. That was a more complex transaction, the
                 Citizens - at the time, it was combined with San Jose-was
                 more complex that what we're dealing with here, which is a
                 straight acquisition of the parent company.

S. Dany:         OK. Great. Thank you.

Operator:        The next question comes from Michael Herzog with Davidson
                 Kempner. Please go ahead.

Michael Herzog:  Hi. Just building on that, could you give us a little bit
                 more flavor for where you think the important filings are
                 going to be required now? I understand that it is 14 states
                 that we need filings in. Just an overview of how the process
                 is going to go.

E. Wolf:         I wish I could give you a cookie cutter answer for all of the
                 states but there isn't one. Different states have different
                 requirements. The way the process we're working on now is
                 that we'll file the applications starting in December. We
                 will file in all 14 states, and then in terms of response to
                 inquiries or questions that they have, we will do and respond
                 to those as soon as we receive the individual comments from
                 the staff and the Commission.

M. Herzog:       Do we know, for instance, whether we definitely have to file
                 with California?

E. Wolf:         Yes we do.

M. Herzog:       We definitely do?

E. Wolf:         Yes.

M. Herzog:       OK.

E. Wolf:         In the list of 14 states I mentioned, those are states we
                 have to file in. California is one. New Jersey is another.
                 Pennsylvania--if I look at our major states, it's
                 Pennsylvania, New Jersey, West Virginia, Illinois, California
                 of the larger states.

M. Herzog:       OK, and the feedback to date?

E. Wolf:         We've not had discussions with the Commissioners or the
                 staff. We will do that as allowed to by the individual state
                 rules when we file the applications.

M. Herzog:       OK. Thank you.

Operator:        The next question comes from Robert Miller Bakewell with
                 Merrill Lynch. Please go ahead.

Robert Bakewell: Some more background to the 3.5 percent increase in O&M
                 expenses per customer. To what extent do you see that as a
                 run rate going forward? Or do you believe that with the
                 accounting center being fully operational at the end of the
                 year in the customer services area that there will actually
                 be some reductions in the run rate going forward?

E. Wolf:         I would expect that our run rate going forward would decrease
                 starting towards the end of 2002 as we complete all of these

RM Bakewell:     Thank you.

Operator:        If there are any additional questions, please press the one
                 followed by the four at this time. The next question comes
                 from Jakob Holm with Bay Isle Financial. Please go ahead.

Jakob Holm:      Good afternoon everyone. I was wondering with the 14 states
                 where you must file for approval, if the approval process
                 runs into rough water in any one of those, can RWE walk away
                 from the transaction at this point?

E. Wolf:         The transaction, if you--it is available for you to look at
                 the agreement. It is filed with the SEC if you would like to
                 do that. It has several clauses dealing with materiality and
                 material adverse effect. It is our intent as well as RWE's
                 and Thames' to get this transaction completed, and that is
                 the goal that we've set for ourselves.

J. Holm:         OK. Thank you.

Operator:        The next question comes from Christian Correa with Lehman
                 Brothers. Please go ahead.

Christian Correa: Could you repeat the list of states in which you're required
                  to file and the states in which you've made advisory filings.

E. Wolf:         Did I read that too fast?

C.Correa:        It was pretty quick.

E. Wolf:         It is available. We will have it up for you to look at. Here
                 it is: Arizona, California, Connecticut, Illinois, Kentucky,
                 Maryland, New Hampshire, New Jersey, New Mexico, New York,
                 Ohio, Pennsylvania, Virginia, and West Virginia. Connecticut
                 and New Hampshire. That is our interpretation at the moment.
                 There are advisory letters that we are filing in Hawaii,
                 Iowa, Missouri, Tennessee, and Texas.

C. Correa:       Great. Thank you.

E. Wolf:         You're welcome.

Operator:        Once again, if you do have a question, please press the one
                 followed by the four at this time. I am showing no additional
                 questions. Please continue with your presentation or any
                 closing comments.

E. Wolf:         I'd like to thank each of you for joining us on our quarterly
                 call. If you have any questions, feel free to direct them to
                 myself or Jim Harrison. Thank you.

Operator:        Ladies and gentlemen, that does conclude your conference for
                 today. A Post View replay of this conference will be
                 available beginning today at 4:00 pm eastern and running
                 through November 5th. To access the Post View replay you will
                 need to dial 800/633-8284 and enter reservation number
                 19805637. You may all disconnect. Thank you for

                                    * * *

          American Water Works Company, Inc. (the "Company"), RWE
Aktiengesellschaft, a company organized under the laws of the Federal Republic
of Germany ("Guarantor"), Thames Water Aqua Holdings GmbH, a company organized
under the laws of the Federal Republic of Germany and a wholly owned
subsidiary of Guarantor ("Parent"), and Apollo Acquisition Company, a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub") have entered into
an Agreement and Plan of Merger, dated as of September 16, 2001, pursuant to
which Sub will be merged with and into the Company with the Company surviving
the merger (the "Merger"). In connection with the Merger, the Company will be
filing a proxy statement with the Securities and Exchange Commission (the
THE MERGER. Investors and security holders may obtain a free copy of the proxy
statement when it becomes available and other documents filed by the Company
with the SEC in connection with the Merger at the SEC's web site at
www.sec.gov. Security holders of the Company may also obtain for free a copy
of the proxy statement and other documents filed with the SEC by the Company
in connection with the Merger by contacting Nancy A. Macenko, Vice President
External Affairs, at (856) 566-4026.

          The Company and its subsidiaries and their respective directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the Company's stockholders in favor of the Merger. These
directors include the following: Marilyn Ware, Gerald C. Smith, J. James Barr,
Henry G. Hager, Ross A. Webber, Frederick S. Kirkpatrick, Paul W. Ware, Nancy
Ware Wainwright, Ray J. Groves, Elizabeth H. Gemmill, William S. White,
Anthony P. Terracciano, William O. Albertini, Rhoda W. Cobb and Horace
Wilkins, Jr. and these officers include Joseph F. Hartnett, Jr., Daniel L.
Kelleher, W. Timothy Pohl, Robert D. Sievers, Ellen C. Wolf, Nancy A. Macenko
and James E. Harrison. Collectively, as of March 5, 2001, the directors and
executive officers of the Company may be deemed to beneficially own
approximately 21.9% of the outstanding shares of the Company's common stock
and under 5% of the outstanding shares of the Company's Cumulative Preferred
Stock, 5% Series. Stockholders of the Company may obtain additional
information regarding the interests of the participants by reading the proxy
statement when it becomes available.

          Forward looking statements in this report, including, without
limitation, statements relating to the Company's plans, strategies,
objectives, expectations, intentions and adequacy of resources, are made
pursuant to the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. These factors include, among others, the
following: the success of pending applications for rate increases, inability
to obtain, or to meet conditions imposed for, regulatory approval of pending
acquisitions, weather conditions that tend to extremes of temperature or
duration; availability, terms and development of capital; business abilities
and judgment of personnel; changes in, or the failure to comply with
governmental regulations, particularly those affecting the environment and
water quality; competition; success of operating initiatives, advertising and
promotional efforts; existence of adverse publicity or litigation; changes in
business strategy or plans; quality of management; general economic and
business conditions; the ability to satisfy the conditions to closing set
forth in the definitive agreement; and other factors described in filings of
the Company with the SEC. The Company undertakes no obligation to publicly
update or revise any forward looking statement, whether as a result of new
information, future events or otherwise.