Pennsylvania American Water Closes New Acquisition in Northeast Pennsylvania

Pennsylvania American Water, a wholly owned subsidiary of American Water (NYSE: AWK), announced today that it has acquired the water system assets of Birch Acres Water Works Inc. in Monroe County. The transaction marks Pennsylvania American Water’s third water system acquisition in 2010.

The newly acquired system serves nearly 150 people in Smithfield Township and is located close to the company’s existing Country Club of the Poconos water system. The transaction is valued at approximately $56,000.

With this acquisition, Pennsylvania American Water takes over a troubled water system that has experienced frequent service outages due to aging, leaking water lines, according to Pennsylvania American Water President Kathy L. Pape. “We are prepared to devote the resources and technical expertise to resolve the service reliability problems that have plagued this community, as well as improve fire protection for Birch Acres residents,” she said.

Pennsylvania American Water will make approximately $350,000 in needed capital improvements over the next several months, weather permitting, to replace much of the system’s aging pipe. The company also plans to interconnect the newly acquired system with its Country Club of the Poconos water system in 2011 to improve service reliability and to enable the installation of fire hydrants to provide fire protection for Birch Acres.

This transaction follows Pennsylvania American Water’s purchases of the Nittany Water Company serving Centre and Clinton counties in February and the Sutton Hills Homeowners Association water system near Wilkes-Barre in May.

Pennsylvania American Water is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 2.2 million people. Founded in 1886, American Water is the largest investor-owned U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 16 million people in 35 states, as well as Ontario and Manitoba, Canada. More information can be found by visiting www.amwater.com.

This release contains forward looking statements, including, among others, our plan to continue our long-term strategy of capital investment in our systems. There are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements including: general economic business conditions, unfavorable weather conditions, changes in regulations or regulatory treatment and availability and the cost of capital. We undertake no obligation to publicly update or revise any forward-looking statement.