About American Water Works Company

American Water Works Company, Inc. operates as a water and wastewater utility company in the United States. The company provides drinking water, wastewater and other related services to over 14 million people in 24 states. The company conducts the majority of its business through regulated utilities that provide water and wastewater services, collectively presented as one reportable segment, referred to as the Regulated Businesses. The company also operates other businesses that provide water and wastewater services to the U.S. government on military installations, as well as municipalities. Regulated Businesses The company’s primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers. The company’s utilities operate in approximately 1,700 communities in 14 states in the United States, with 3.5 million active customers in its water and wastewater networks. Services provided by its utilities are subject to regulation by multiple state utility commissions or other entities engaged in utility regulation, collectively referred to as public utility commissions (PUCs). Federal, state and local governments also regulate environmental, health and safety, and water quality and water accountability matters. Customers The company’s Regulated Businesses have a large and geographically diverse customer base. A customer is defined as a person, business, municipality or any other entity that purchases the company’s water or wastewater services as of the last business day of a reporting period. One single customer may purchase the company’s services for use by multiple individuals or businesses. Examples of these customers are homes, apartment complexes, businesses and governmental entities. The vast majority of the company’s regulated water customers are metered, which allows it to measure and bill for its customers’ water usage, typically on a monthly basis. The company employs a variety of methods of customer meter reading to monitor consumption. The company’s wastewater customers are billed either a flat rate or based upon their water consumption. Residential customers make up a substantial portion of the company’s customer base in all of the states in which it operates. The company also serves commercial customers, such as food and beverage providers, commercial property developers and proprietors, and energy suppliers, fire service customers, where the company supplies water through its distribution systems to public fire hydrants for firefighting purposes and to private fire customers for use in fire suppression systems in office buildings and other facilities, industrial customers, such as large-scale manufacturers, mining and production operations, public authorities, such as government buildings and other public sector facilities, including schools and universities, and other utilities and community water and wastewater systems in the form of bulk contracts for the supply of water or the treatment of wastewater for their own customers. Competition When pursuing acquisitions, the company’s largest investor-owned competitors, based on a comparison of operating revenues and population served, include Essential Utilities, Inc., American States Water Company and California Water Service Group. From time to time, the Company also faces competition from infrastructure funds, multi-utility companies and others, such as Algonquin Power and Utilities Corp., Eversource Energy, SouthWest Water Company and Corix Infrastructure, Inc. Condemnation and Eminent Domain For example, the Monterey water service system assets (the Monterey system assets) of the company’s California subsidiary (Cal Am) are the subject of a potential condemnation action by the Monterey Peninsula Water Management District (the MPWMD) stemming from a 2018 public ballot initiative. Water Supply and Wastewater Services The company’s Regulated Businesses generally own the physical assets used to store, pump, treat and deliver water to its customers and collect, treat, transport and recycle wastewater. The company is dependent on defined sources of water supply and obtains its water supply from surface water sources, such as reservoirs, lakes, rivers and streams; from groundwater sources, such as wells and aquifers; and water purchased from third-party water suppliers. The level of water treatment the company applies varies significantly depending upon the quality of the water source and customer stipulations. Surface water sources typically require significant treatment, while groundwater sources often require chemical treatment only. The company’s ability to meet the existing and future water demands of its customers depends on an adequate water supply. Drought, governmental restrictions, overuse of sources of water, the protection of threatened species or habitats, contamination or other factors may limit the availability of ground and surface water. The company employs a variety of measures in an effort to obtain adequate sources of water supply, both in the short-term and over the long-term. The geographic diversity of the company’s service areas may mitigate some of the economic effects on the water supply associated with weather extremes the company might encounter in any particular service territory. For example, in any given summer, some areas may experience drier than average weather, which may reduce the amount of source water available, while other areas the Company serves may experience wetter than average weather. The company evaluates quality, quantity, growth needs and alternate sources of water supply as well as transmission and distribution capacity to provide water service to its customers. The company reviews current climate science and global models related to temperature, precipitation and sea level rise on an ongoing basis. Where actionable forecasts are available, the company will use this information in its comprehensive planning studies and asset management plans. These studies and plans, which are used by the company to develop its asset management and system reliability strategies, assess the climate risk and resiliency of the company’s water and wastewater systems over short-, medium- and long-term time horizons, and include evaluations of the availability of water supplies and system capacity against a number of different factors, projections and estimates. In connection with supply planning for most surface or groundwater sources, the company employs models to determine safe yields under different rainfall and drought conditions. Surface and ground water levels are routinely monitored so that supply capacity deficits may, to the extent possible, be predicted and mitigated through demand management and additional supply development. In California, where the state has recently experienced a multi-year drought, the company utilizes multiple water supply options including numerous ground water wells in multiple aquifers as well as various long-term purchase water agreements with regional water suppliers to optimize supplies while assuring resiliency during dry years. An example of the company’s use of long-term planning to ensure that it has adequate water supply is its involvement in the Monterey Peninsula Water Supply Project (the Water Supply Project) in California. The Water Supply Project includes the construction of a desalination plant, to be owned by Cal Am, and the construction of wells that would supply water to the desalination plant. In addition, the Water Supply Project also includes Cal Am’s purchase of water from a groundwater replenishment project (the GWR Project) between Monterey One Water and the MPWMD. The Water Supply Project is intended, among other things, to fulfill obligations of Cal Am to eliminate unauthorized diversions from the Carmel River as required under orders of the California State Water Resources Control Board (the SWRCB). Wastewater services involve the collection of wastewater from customers’ premises through sewer lines. The wastewater is then transported through a sewer network to a treatment facility, where it is treated to meet required regulatory standards for wastewater before being returned to the environment. The solid waste by-product of the treatment process is disposed of or recycled in accordance with applicable standards and regulations. Seasonality Customer demand for the company’s water service is affected by weather and tends to vary with temperature and amount and frequency of rainfall. Customer demand is generally greater during the warmer months, primarily due to increased water usage for irrigation systems and other outdoor water use. As such, the company typically expects its operating revenues to be the highest in the third quarter of each year (year ended December 31, 2023). Two of the company’s jurisdictions, California and Illinois, have adopted revenue stability mechanisms which permit the company to collect state PUC-authorized revenue for a given period that is not tied to the volume of water sold during that period, thereby lessening the impact of weather variability. Affordability The company supports the United Nations’ declaration of access to clean water and sanitation as a human right, regardless of economic status. The company’s approach to water access and affordability consists of two key strategies. The first is to supply water that is safe, reliable and meets the needs of its customers. The second is to provide affordable water services to customers while protecting its customers’ right to clean water, regardless of economic status or geographic location. The company also focuses on addressing water affordability by maximizing both supply-side and demand-side efficiency. The company continues to advocate for federal and state customer affordability support and monitors the number of customers enrolled in its assistance programs to make sure that it is effectively responding to customer needs. Other Other primarily includes the MSG business, which enters into long-term contracts with the U.S. government to provide water and wastewater services on military installations. The Contract Services Group (CSG), also included in Other, has three contracts with municipal customers to operate and manage water and wastewater facilities and provide other related services. Military Services Group (MSG) MSG operates on 18 military installations under 50-year contracts with the U.S. government as part of its Utilities Privatization Program. The scope of these contracts generally includes the operation and maintenance of the installation’s water and wastewater systems and a capital program focused on asset replacement and, in certain instances, systems expansion. The replacement of assets assumed when a contract is awarded to MSG is completed either through a discrete set of projects executed in the first five years of the contract or through the long-term recapitalization program performed over the life of the contract. Competition MSG faces competition from a number of service providers, including American States Water Company and Veolia Environnement S.A. Service Company and Security American Water Works Service Company, Inc. (Service Company) is a wholly owned subsidiary of the company that provides support and operational services to the company and its affiliates. These services are predominantly provided to the company’s Regulated Businesses under contracts that have been approved by PUCs, where necessary, and is also provided to the MSG and CSG businesses as requested or may otherwise be necessary. Services provided by Service Company may include accounting and finance, administration, business development, communications, compliance, education and training, engineering, environmental, health and safety, human resources, information systems, internal audit, investor relations, legal and governance, operations, procurement, R&D, rates and regulatory support, security, risk management and insurance, treasury, and water quality. Service Company also provides customer support to the company’s Regulated Businesses, which includes call handling, billing, a major accounts program and other related services. Environmental, Social Responsibility and Governance The company’s water and wastewater operations, including the services provided by its Regulated Businesses, MSG and CSG, are subject to extensive federal, state and local laws and regulations governing the protection of the environment, health and safety, the provision of water and wastewater services, particularly with respect to the quality of water the company delivers to its customers, and the manner in which it collects, treats, discharges, recycles and disposes of wastewater. In the United States, these regulations are developed under federal legislation including the Safe Drinking Water Act, the Reduction of Lead in Drinking Water Act and the Clean Water Act, and under a variety of applicable state laws. For example, the company’s water and wastewater treatment facilities store and use gaseous chlorine, as well as other chemicals that generate wastes that require proper handling and disposal under applicable environmental requirements. The company’s facilities and operations are also subject to requirements under the U.S. Occupational Safety and Health Act and inspections thereunder. The process of developing new drinking water standards is long and complex, but the company actively participates with the EPA and other water industry groups by sharing research and water quality operational knowledge. The company is within the EPA’s time frame for compliance with standards and rules developed under the regulation of the Safe Drinking Water Act, which includes sample collection, data analysis, and, in some instances engineering planning and implementation of treatment enhancements. Further, the EPA is actively considering development of a new regulation for perchlorate and updates to the current microbial and disinfection byproduct regulations. In addition to requirements applicable to the company’s wastewater collection systems, its operations require discharge permits under the National Pollutant Discharge Elimination System (NPDES) permit program established under the Clean Water Act, which must be renewed every five years. Pursuant to the NPDES permit program, the EPA and implementing states set maximum discharge limits for wastewater effluents and overflows from wastewater collection systems. History American Water Works Company, Inc. was founded in 1886. The company was incorporated in Delaware in 1936.

Country
Industry:
Water supply
Founded:
1886
IPO Date:
04/23/2008
ISIN Number:
I_US0304201033
Address:
1 Water Street, Camden, New Jersey, 08102-1658, United States
Phone Number
856 955 4001

Key Executives

CEO:
Hardwick, M.
CFO
Griffith, John
COO:
Norton, Cheryl