Customers Win as California American Water Executes Direct Access Power Agreement and Water Source Optimization

California American Water announced today it executed a direct access power purchase agreement for its largest facilities in Los Angeles and Ventura Counties.

Direct access is a program managed by the California Public Utilities Commission (CPUC) to allow large commercial power users to purchase power directly from competitive energy service providers and realize savings. The total reductions in costs realized will be used to lower customer bills the following calendar year. While the exact savings is not known at this time, in similar instances savings have been approximately 10 percent off of the current Southern California Edison commercial rate, which would equate to about $163,000 per year for California American Water. The agreement term is October 2013 to January of 2015.

“We are thrilled to be able to take advantage of direct power purchase savings and pass those savings directly onto our customers,” said Rob MacLean, president of California American Water.

Separately, California American Water announced it will save approximately $630,000 in Los Angeles County through water rights leases in the Central, Raymond and Main basins during the 2013/2014 fiscal year. As with the savings on electricity, every dollar saved on the water supply will flow directly to the benefit of customers through a lower cost of service.

“By maximizing our groundwater supplies and limiting our reliance on higher-cost imported water, we are able to provide the least-cost-possible water to our customers,” said Garry Hofer, Southern California Operations Manager. “These savings are directly passed along to those customers.”

Taken together, California American Water expects these two initiatives will save approximately $793,000 for its operations in Los Angeles and Ventura Counties.

California American Water, a subsidiary of American Water (NYSE: AWK), provides high-quality and reliable water and/or wastewater services to approximately 600,000 people.

Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs approximately 6,700 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 14 million people in more than 30 states, and parts of Canada. More information can be found by visiting www.amwater.com.

Cautionary Statement Concerning Forward-Looking Statements

This release contains forward looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to our expectation of cost savings and our ability to pass potential savings on to our customers. Forward-looking statements are predictions based on our current expectations and assumptions regarding future events. There are important factors, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to: general economic business conditions; changes in regulations or regulatory treatment; and cost and availability of electricity. For a further discussion of the risks relating to American Water’s business, see Item 1A, “Risk factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012. American Water expressly disclaims any obligation to update these forward-looking statements, except as otherwise specifically stated by American Water or as required by law.