American Water Works Company, Inc.

American Water Works Company, Inc., known as American Water, is a publicly traded (NYSE: AWK) water utilities and sewage treatment company headquartered in Voorhees, New Jersey. It is the largest for-profit provider of water and wastewater services in the United States where 86 percent of consumers receive their water services from publicly owned water systems. According to American Water's 2012 Annual Report, it supplies "an estimated 14 million people with drinking water, wastewater and other water-related services in over 30 states and two Canadian provinces" and employs approximately 6,700 as of 2012. American Water has been a major force behind the privatization of water services and has come under fire from communities across the country for charging high rates and providing poor services. In 2012, American Water generated $2.9 billion in total operating revenue. CEO Jeffrey Sterba has made over $8 million in the three years he has headed up the company.

In 2011, Citigroup economist Willem Buiter predicted that "water as an asset class will, in my view, become eventually the single most important physical-commodity based asset class, dwarfing oil, copper, agricultural commodities and precious metals." But some American cities are fighting this commodification of precious water resources and have engaged in successful campaign to take back or "municipalize" public water utilities, see below for details.



Profits
In 2012, American Water generated $2.9 billion in total operating revenue. It had a net income of $358.1 million in 2012.

Corporate Structure
American Water Co. currently operates as a holding company that conducts most of its business through subsidiaries incorporated in various states. The company has a total of 15 state-based subsidiaries that own and/or operate water utilities in California, Hawaii, Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, New Jersey, New York, Pennsylvania, Tennessee, Virginia, and West Virginia. In addition to these state-level divisions, American Water has 47 other subsidiaries throughout the United States and Canada, according to the Securities and Exchange Commission (SEC) data.

Founding
American Water Co. was founded in New Jersey as American Water Works & Guarantee Company in 1886 by a small group of businessmen involved in local water utilities during the post-civil war era, eventually evolving into American Water Works Company, Inc. In 2003, German energy and water service provider RWE purchased American Water only to sell it a few years later and completely divest in 2009. According to the non-profit organization, Food & Water Watch's website, "Leaked minutes from a RWE board meeting revealed that American Water had failed to meet any of its targets and that 'considerable political resistance to privatization of the water sector' was a major factor in its failure to thrive." Based on an analysis of Environmental Protection Agency data in 2012, Food & Water Watch reported that privately owned water systems fell by 16% between 2007 and 2011 while public water services rose by 8%.



Municipalities, Unhappy with American Water Subsidiaries, Attempt to Take Back Control of Their Water
As reported by the non-profit organization, Food & Water Watch, when cities sell or contract out their water and/or sewer systems to private companies, they have often experienced problems such as increased costs, a decline in service, increased environmental impact, lost jobs and a reduction in pay and/or benefits for workers. Many U.S. cities have attempted to regain control of their municipal water systems, a process called "municipalizations." If the private water company refuses to sell back the utility, some cities have used eminent domain powers, which require compensation at fair market value, to secure public ownership of the public's water.


 * Ongoing Fight for Public Water in Monterey, CA - Aggravated by inadequate service and high rates, community members in the Monterey Peninsula have been fighting for local public control of their water system from California American Water for over a decade. In the early 2000s, Monterey FLOW (Friends of Locally Owned Water) and Citizens for Public Water formed to mobilize behind a public buyout and "Measure W", which appeared on the ballot in November 2005. "Measure W" would have allowed for funding of a study to assess the process for a community buy-out of the water utility.


 * To defeat the measure, California American Water outspent the community groups 10-1. The company spent $300,000, making the campaign the most expensive in Monterey history. BNA Communications partnered with California American Water to develop a strategy aimed at defeating the measure by studying other failed bids at public takeovers of privately run utilities across the country. BNA Communications then used targeted direct mail, field communications, and television, radio, and newspaper advertisements to defeat Measure W. The Monterey County Herald reported on November 20, 2006 that a judge allowed California American to pass the costs of its “public outreach” — $1,353,831 — on to its customers through new surcharges beginning in January 2007. Measure W was defeated with 62.63% (19,296 voters) voting no and 37.37% (11,514 voters) voting yes.


 * In 2010, amid ongoing controversy about a proposed desalination plan, WaterPlus formed to advocate on behalf of California American ratepayers and support a public purchase of the water system. WaterPlus members are also involved in the newly formed Public Water Now, which residents formed in May 2013 to continue the fight for public water. The organization launched a campaign to put the question of a public buyout on the June 2014 ballot.


 * In 2011, a group named WaterPlus, led an effort to convince the Monterey Peninsula Water Management District Board of Directors to vote in favor of creating an ad-hoc committee to investigate the feasibility of a public takeover. The effort was opposed by California American Water, the California Water Association (a consortium of private water companies) and their lawyers at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC. The Board of Directors voted against creating the ad-hoc committee.


 * Public Water Now, an NGO run by former businessman Ron Cohen, is currently leading the fight for a public takeover of California American Water assets in Monterey. Cohen has united several likeminded groups, secured non-profit status and created an initiative petition that would require the Monterey Peninsula Water Management District to pursue a public purchase of Cal Am's local assets. The Monterey Herald says “It is arguably the most progress any public ownership effort has made.” Among Public Water Now's complaints is that California American Water has failed to find a new source of water since they had been ordered to do so in 1995, subsequently driving up rates. Public Water Now is attempting to gather the 7,000 signatures to create a ballot initiative which will allow Monterey voters to decide on the takeover. California American Water representative Catherine Bowie stated that any public takeover will result in an eminent domain proceeding because California American Water's assets are "not for sale." She warned that any eminent domain proceeding would be lengthy, contentious and costly.


 * Town of Mooresville Sues Indiana-American Water Co., Inc. to Reacquire Water Utility - In December, 2012, the town of Mooresville, Indiana sued Indiana American Water Company to take back control of their municipal water utility, which, according to the legal complaint the town owned and operated until 2002. The complaint also states that the town attempted to negotiate the purchase of the utility at the independently appraised value of $6.2 million but the company refused to sell. Significant rate increases are reported as the reason for the city's decision to attempt a takeover.
 * A PR campaign has been launched on the company’s behalf which includes billboards, a Facebook page, lawn signs, and a website: mooresvillewaterfacts.com. The website says the city's attempts to reacquire their water resources is a "hostile government takeover." It also includes graphs from what it says is a "survey conducted by a professional research firm" which demonstrates opposition to the takeover and displeasure with Mooresville City Council. When researching who is behind the website, it leads only to Domains BY PROXY, which is a service that allows people (or organizations) to set up websites while keeping their identities secret, but many suspect American Water Co. is behind the spin. [[Image:Mooresville_Water_Facebook.PNG|center|600px]]


 * Southwest Chicago Suburbs Sue for Control of the Lake Michigan Water Pipeline - The suburbs of Bolingbrook, Romeoville, Woodridge, Lemont, and Homer Glen, Illinois joined together in suing American Water subsidiary, American Lake Water Co., to seize control of the Lake Michigan water pipeline. Significant rate increases and additional costs are cited as the reason the cities want to regain control of their water utilities and the Lake Michigan pipeline.
 * The website Chicagometrowaterfacts.com PR campaign is run by American Water and is registered to an American Water technical contact according to a website domain search.


 * Bolingbrook Sues Illinois American Water for Breach of Contract, Excessive Rate Hikes - On November 2, 2010, the Village of Bolingbrook filed a lawsuit against Illinois American Water for breach of contract. Bolingbrook sought contractual damages from the company for improperly overcharging customers from 2003 to 2008 as well as court-ordered relief to properly enforce the contract. The Village also alleged that the company charged Bolingbrook residents higher rates than the neighboring Village of Plainfield and also breached its contract when it failed to consult with the Village before increasing rates.


 * Ongoing Fight for Public Water in Urbana, IL - Food & Water Watch reported on the various problems experienced by Urbana, Illinois residents after their water system was sold to American Water in 2003. The problems included “boil-water notices, instructing customers to boil their water before use because the treatment system had temporarily failed. Customers complained of declining service when American Water centralized its customer service call center. Fire hydrants malfunctioned; a fire destroyed a maintenance building after two hydrants failed.” In addition to poor service, Urbana residents saw their rates jump significantly. A household using 5,000 gallons a month paid $421, while a household using 5,000 gallons a month in an average municipality with public water administration only paid $241.


 * Urbana Mayor, Laurel Prussing, traveled to Germany to speak to shareholders of American Water Co.'s parent company, RWE, in 2006. Prussing was met with applause from the shareholders, but little action from corporate executives, who continued to insist that individual systems were not for sale to communities interested in making a fair offer. Two years later, however, RWE sold American Water Co. citing controversy and push-back.


 * Urbana Mayor Laurel Prussing visited American Water controlling company executives and shareholders RWE in Germany to discuss Urbana’s problems. However, no action was taken and RWE sold American Water in 2008.

Municipalities Succeed in Taking Back Control of Their Water

 * O'Fallon, MO - In 2007 the city of O'Fallon was considering selling its public water system to American Water but delayed after hearing community members' testimony at a city council meeting. The city formed a task force to further study the issue, and it found several disadvantages to a sale: “loss of control and representation,” “possible loss of jobs,” and “loss of future revenues.” After the task force’s presentation, the city council decided not to pursue a sale of the water system in the upcoming election. In 2009, after more than two decades of contracting with private companies to run the systems, the city opted for complete public provision of water. It saved 15 percent by operating the systems with public workers instead of private contractors.


 * Cave Creek, AZ - Unsatisfied with the private management of their local water utility, citizens in the town of Cave Creek, AZ took control of their water system in 2008, which had always been privately owned and operated. With facilities falling apart, the water utility was performing so badly that Cave Creek experienced three system-wide water outages during the summer of 2007.


 * In 2008 Cave Creek was able to purchase the water utility with financial assistance from the Water Infrastructure Financing Authority (State agency responsible for distributing federal SRF loans) in the form of a low-interest loan to pay for necessary improvement. While the town initially retained Arizona American Water as a private operator for half of the operation for a year, it opted not to renew its contract with the subsidiary, citing its desire to regain local control. Residents had been unsatisfied with customer service they received via an 800 number outside the state, as remote personnel often did not know what was happening in Cave Creek.


 * Felton, CA - In 2001, American Water purchased Felton’s water system, which had been privately owned since the late 1800s. According to a Food & Water Watch report, in November 2002, California American Water greatly angered the Felton community with a 74 percent rate hike. In response, residents formed an action group, Friends of Locally Owned Water (FLOW), which advocated against the steep rate hike and petitioned Santa Cruz County to establish a public agency to exercise control over the water system. FLOW also opposed the company’s plan to merge the Felton and Monterey water districts.


 * In 2004, the German utility company RWE -- then the owner of American Water -- "enlisted a public-relations firm to send letters and make telephone calls against" the public takeover ballot initiative in Felton, California. The American Water subsidiary also "acknowledges giving tens of thousands of dollars to a local property owners' association that filed a legal challenge against the referendum."


 * Despite California American Water's deep-pocketed opposition, the push for public water in Felton had its first success with the passage of Measure W in July 2005. Felton residents voted 3-to-1 in favor of an issuing of $11 million in bonds and raising taxes in order to allow the SLV Water District to buy their water system.


 * The district offered California American Water $7.6 million, its appraised value, but the company refused. Company officials stated that the system was not for sale at any price and said they would oppose all public acquisition efforts. The community's only recourse was an eminent domain proceeding. California American responded by "doing all it could to make the system seem more expensive," according to Food & Water Watch. California American's appraisal totaled approximately $25 million, leaving a large discrepancy with the independent appraisal.


 * Further legal tactics by California American in the eminent domain proceedings caused delays and increased expenses for the SLV Water District. Less than a week before trial was scheduled to start, the company settled the case and turned over the water system for $10.5 million. In total it took six years for the people of Felton to gain public control of their water utility from American Water.


 * Montara, CA - According to a study from Food & Water Watch, Montara, a small town near San Francisco, succeeded in regaining public control of their water system after suffering for years from high rates, poor service, and neglect under private ownership. The 1999 sale of the water system to American Water served as a catalyst mobilizing residents to bring the system under local public control.


 * After a campaign which involved community meetings, a door-to-door operation, and a televised debate, residents voted in 2001 by a 4-to-1 margin in favor of a public takeover. The community borrowed $19 million to buy the system from California American Water. At first, the company refused to sell, but the California Public Utilities Commission and Montara Water & Sanitary jointly purchased the system from California American Water in August 2003. A local voter-elected board has been given control over the water system's administration and has succeeded in improving the system and saving public money.

Complaints of Excessive Rates, Poor Customer Service, and Failure to Properly Maintain Infrastructure

 * Pennsylvania American Water Attempts to Charge "Unjust" and "Unreasonable" Rates - On May 8, 2013, the Pennsylvania Office of Consumer Advocate filed a Formal Complaint with the Pennsylvania Public Utility Commission against Pennsylvania American Water alleging that the company's proposed rate changes were “unjust, unreasonable and in violation of law... [and] will allow the Company to recover an excessive rate of return...”


 * Kentucky Public Service Commission Steps in to Prevent Excessive Rate Hikes - The KYPSC squarely rejected the company's proposed rate increase and said that it would have to refund the amount it had over-collected, plus interest, to customers. According to its news release, the PSC also ordered Kentucky-American to immediately cease its practice of "disconnecting customers who fail to pay storm water or garbage fees, which the water company collects, along with sewer fees, on behalf of LFUCG [Lexington-Fayette Urban County Government]. State law permits disconnection of water service for failure to pay sewer fees, but not for other services unrelated to water service."


 * West Virginia American Water Co. Sends Customer $5,000 Bill Due to the Company's Malfunctioning Meter, Demands Payment - A West Virginia man filed a lawsuit against West Virginia American Water Co. after he allegedly received a $5,136.91 water bill which was much higher than his typical $20-30 water bills. The issue allegedly stemmed from a faulty meter, which the company owned and was responsible for. However, even though this faulty meter was American Water's responsibility, the customer alleges that the company still demanded payment of the more than $5,000 bill, and when he did not pay the full amount demanded, they added late fees/penalties onto his account.


 * Pennsylvania Public Utility Commission Fines Pennsylvania American Water for Multiple Service Issues - Pennsylvania American was fined for failing to maintain and repair its facilities and properly discontinue service to a vacant rental building. The excess water caused damage to the unit. The company also allegedly knew about the extraordinary water flows but failed to investigate this extraordinary loss of water from its reserves.


 * New Jersey American Water Failed to Properly Maintain Bridge Prior to Collapse, Resulting in Countywide Water Emergency - After Hurricane Irene in 2011, New Jersey American Water (NJAW) failed to respond adequately to prevent the subsequent collapse on June 29, 2012 of a bridge over the Swimming River in Lincroft, New Jersey adjacent to a NJAW water treatment facility, according to a report by another large privatization company, CH2M Hill. The bridge had been flooded over during Hurricane Irene, causing damage to the infrastructure. The company identified the damages, but didn't address them quickly enough, according to the report. As a result of the bridge collapse, nearly 285,000 people in the county were subject to water usage restrictions and a boil water advisory during a mid-summer heat wave.


 * NJAW Shuts Off Water on New Jersey Family Short 84 Cents on Bill - The Pezzano family in Middletown, New Jersey had their water shut off in July 2012 -- without any warning or notification -- because there was a balance of 84 cents on their bill. "They don't come to the door. They just shut it off and walk away," Joe Pezzano told the local Asbury Park Press.


 * California Consumers See Unexpectedly High Bills, Some Caused by California American Water Accounting Error - In 2012, California American Water asked California's Public Utilities Commission (PUC) to allow it to make Monterey Peninsula customers pay for $6 million in discounted bills it said were due to water leaks between 2007 and 2011. PUC denied the request, and California American eventually dropped its request, although it said "it is still interested in recouping any future losses it incurs when voluntarily reducing customers' large water bills on a one-time basis." But in May 2013, the company admitted that it was at fault in at least some of the cases of high water bills, due to accounting and meter register errors. And some of the causes for the inordinately high bills were never discovered. For example, according to The Herald News, "Toni Ray, whose Cal Am bill of nearly $10,000 was eventually reduced to about $2,300, said she has paid the final amount in full but the cause of her sudden spike was never determined, even though a plumber checked her house for leaks and found none. Her bills since the spike have been about $40 a month, she said."

Lawsuits

 * Anthem, Arizona Homeowners File Class Action Lawsuit for Hiding Costs of Water Infrastructure then Raising Water Rates to Pay for It - In 2008, homeowners filed a class action lawsuit alleging that the homebuilders and water company failed to disclose that the cost of the water and wastewater infrastructure needed to serve the community was not included in their home’s purchase price in order to keep prices artificially low. Then, after the homes were sold, Arizona American wanted to significantly increase their rates in order to pay for the infrastructure. The Court held in its order on August 30, 2010, that the home developer did have “a duty under the Subdivision Reporting Act to disclose that homebuyers would bear the costs of improvements and facilities through future rate increases.” Arizona American Water was bought out in 2011 by EPCOR


 * Chesterton, Indiana Sues Over Collapsed Sanitary Sewer Main - In November 2012, the town of Chesterton, Indiana filed a lawsuit seeking more than $25,000 from Indiana-American Water Company (IAWC). The Chesterton Tribune reported that according to the suit, "IAWC crews, in the course of working on a water line in 2011, damaged a sanitary sewer main, resulting not only in the expense of repairing the sewer main but of compensating a homeowner for damage done when the main backed up into his basement."


 * Kentucky Public Service Commission Fines Kentucky American Water $10,000 for Violating Restrictions on Dividend Payments to Its Parent Company - The Kentucky PSC fined Kentucky American Water for violating a previous order issued in 2002 in which Kentucky American Water was required to obtain prior approval before paying dividends to its parent entities during any calendar year if the payments exceeded five percent of the company’s retained earnings from the previous year. According to the order from May 2010, which rejected the company's offer to settle and pay a small penalty of between $25 and $2,500, the purpose of the 2002 order was “to guard against any drain on KAWC’s financial resources through excessive dividend payments.” The final order issued in August 2010 accepted the company's revised offer, stating, "Given the seriousness of the violations and KAWC’s prior history of non-compliance with the Commission’s Order of December 20, 2002, a penalty payment of $10,000 is appropriate."

Environmental and Water Quality Issues

 * Pennsylvania Department of Environmental Protection Fines Pennsylvania American Water Co. $25,000 for Fluoride Spill - According to the department's press release, an operator at a Pennsylvania American Water plant "intentionally propped open a valve that led to the release of more than 300 gallons of fluoride inside the treatment building." Also, the "Do Not Consume" warnings were not issued in a timely manner or issued adequately and frequently enough to properly warn residents of the danger. The company must pay the $25,000 and take corrective actions.


 * Arsenic and Trichloroethylene Contamination in Arizona - The Arizona Department of Environmental Quality (ADEQ) found that Arizona American Water distributed drinking water contaminated with excessive levels of arsenic at its Tubac Valley public water system in Santa Cruz County during February 2009. Test results submitted by Arizona American to ADEQ from February 9, 2009 showed arsenic up to three times the "maximum contaminant level" under state and federal regulations. In July 2009, the company signed a consent order with ADEQ agreeing to install a treatment system for Tubac Valley to reduce arsenic levels below the permissible limit.


 * The previous year, ADEQ found that Arizona American distributed drinking water contaminated with trichloroethylene (TCE) to customers in Scottsdale and Paradise Valley. Tests showed that TCE levels were up to four times the legal limit, due to an equipment malfunction at a treatment plant operated by the company, which had allowed groundwater contaminated with TCE to be pumped into the drinking water system for up to 16 hours on January 15-16, 2008.


 * The contamination resulted in Arizona American warning its nearly 5,000 customers in Scottsdale and Paradise Valley not to drink or cook with the tap water for three days, until TCE levels were reduced to below the permissible limit. This, in addition to the previous incident in 2007 where "incomplete remediation" of TCE-contaminated groundwater occurred, led ADEQ to impose a $69,000 fine against the American Water. ADEQ's director strongly criticized Arizona American's conduct in the case: "The company delivered contaminated drinking water to its customers, failed to maintain and operate its facilities to deliver safe drinking water, and failed to implement an adequate emergency plan. This is simply unacceptable."


 * EPA Finds Uranium Exceeds Maximum Contaminant Level (MCL) at Texas-American Water Company's Greenwood Village Water System - Pursuant to the Safe Drinking Water Act, the EPA's Administrative Order and letter requires Texas-American Water Company to submit a detailed plan to meet the uranium MCL, a cost analysis of the proposed plan, and a construction schedule to the EPA.


 * Kentucky American Water Agrees to $10,000 Fine for Damaging Creek - The company reached an agreement with state environmental officials to pay a $10,000 fine and spend $20,000 on environmental programs after allegedly damaging 1,000 feet of Buck Run Creek in Franklin County while laying a pipeline. The company did not confirm or deny the allegations in the agreement.


 * Involvement in the Toxic Sludge Industry and Fines From Ontario Ministry of the Environment - According to American Water’s SEC filings, part of the company’s operations also includes a “biosolids management group,” called Terratec, which is located in Canada. Terratec “provides environmentally sustainable management and disposal of biosolids and wastewater byproducts." “Biosolids” is an Orwellian PR euphemism for toxic sewage sludge, which can contain contaminants such as endocrine disruptors, pharmaceutical residues, phthalates, industrial solvents, resistant pathogens, and perfluorinated compounds. The company’s website states that Terratec’s “Beneficial Reuse programs” include agriculture and nursery programs. "Beneficial reuse" is another misleading PR phrase often used by the sewage sludge industry for spreading sewage sludge on soil used to grow food, and other activities.


 * Terratec transports treated sewage sludge from wastewater treatment plants throughout Ontario and distributes it onto farm fields. This violates clauses in the company’s operating permit requires it to inject biosolids beneath the soil to help control odors and potential runoff. During an inspection at a site in Southwest Middlesex on May 7, 2008, however, Ontario Ministry of the Environment staff “found that the company had continued to spread, even though the equipment was not placing the biosolids beneath the soil surface." On March 29, 2010, Terratec pleaded guilty in a Canadian court for improperly spreading “biosolids” and was fined CDN $10,000 plus a “victim fine surcharge.”


 * Terratec also has a checkered past in the transportation of biosolids. According to American Water Alert, "in November and December 2008, the company was fined a total of CDN $300,000, plus a 25% victim fine surcharge in three different court decisions involving biosolid spills on Ontario roads during 2006." In two of the three cases, the spill was approximately 500 to 1,000 pounds of biosolids and in the other it was one to three tons.


 * American Water and Fracking Conflicts of Interest - American Water has engaged in a "massive lobbying effort to expand controversial shale gas drilling," in what many watchdog groups see as a major conflict of interest.


 * American Water (through its Pennsylvania subsidiary, Pennsylvania American Water) and another private water utilities corporation, Aqua America, are the leading suppliers of drinking water in Pennsylvania where drilling is a booming business. Both companies sell water to gas companies and are members of the gas industry's Marcellus Shale Coalition, which is led by major gas producers. The coalitions seek to bolster the region's economy through the "responsible development of natural gas." At the same time, American Water and Aqua America have "expressed interest in treating drilling wastewater, a potentially lucrative opportunity."


 * Shale gas drillers use a combination of horizontal drilling and hydraulic fracturing, or “fracking,” to extract natural gas from shale rock like the Marcellus formation in Pennsylvania. This heavy industrial activity forces millions of gallons of water mixed with sand and chemicals into the ground to crack the shale rock and release gas, a process that has the potential to put drinking water resources at risk as it produces large amounts of toxic wastewater that can be difficult to dispose of safely.

Corporate Subsidies
According to Subsidy Tracker, a project of Good Jobs First, several of American Water's subsidiaries have benefitted from government subsidies in the form of grants, tax credits/rebates and reimbursement. According to Subsidy Tracker, American Water Works Co. and its subsidiaries have received the following government subsidies (this is not an exhaustive list):
 * American Water Services Company Inc. received nearly $1 million in grants and tax credits from the state of Florida for work on their customer service regime in Escambia County. In 2004 it received a $660,000 tax credit for "Customer Care Centers" and in 2005 it received $200,000 for "Management Services."
 * California American Water received reimbursements worth $131,508 in 2006 and $34,592 in 2011 from the state of California for employment training in multiple counties.
 * In 2011, Pennsylvania Water received a $6,286 research and development tax credit from the Pennsylvania Department of Revenue.

Political Contributions
American Water has spent nearly $1.3 million in political contributions to individuals, PACs, and third parties from 2000 to 2012, according to the Center for Responsive Politics.


 * California American Water Spent $300,000 on a Local Ballot Initiative in Monterey, California that would have authorized a study on the public takeover of the corporately owned utility, outspending opposition ten to one. A judge then allowed the company to pass the costs of its "public outreach" -- $1,353,831 -- on to its customers through new surcharges beginning in January 2007 (see "Ongoing Fight for Public Water in Monterey, CA" under "Municipalities, Unhappy with American Water Subsidiaries, Attempt to Take Back Control of their Water" for more).


 * New Jersey American Water Spent More Than $1 Million on Its Failed Effort to Take over Part of Trenton’s Water System. That was 34 times as much as spent by the local Stop the Sale campaign.

Lobbying
The company lobbies extensively at the state level, it has 26 lobbyists in 4 states according to the National Institute for Money in State Politics.

"Risk Factors" in SEC filings
In its SEC filings, American Water cites several market and regulatory aspects of the water utilities sector as “risk factors” that may affect its business and future prospects. These risk factors often show the incentives the company has to influence public policy and the direction their advocacy would take. Among these are changes in environmental laws and economic regulation that could "materially and adversely affect our business, financial position, results of operations or cash flows and liquidity," specifically, water quality and health and safety laws. The company states in its annual report:


 * Environmental, health and safety and water quality regulations are complex and change frequently. The overall trend has been that they have become more stringent over time. As newer or stricter standards are introduced, our capital and operating costs could increase.

It also claims that labor relations, economic regulation and decisions by state PUCs (Public Utilities Commissions) and other regulatory agencies can significantly affect their business. American Water's annual report states, "Failure of the PUCs to recognize reasonable and prudent operating and capital costs can result in the inability of the utility to earn the allowed return and can have a significant impact on the operations and earnings of our Regulated Businesses." In other words, if the local utilities commissions are not on board with price increases and utility workers fight wage decreases after privatization, it's bad for business.

Brief Ownership By Germany's RWE
American Water was founded in 1886 as the American Water Works & Guarantee Company, and in 1947 was reorganized and renamed the American Water Works Company. In January 2003, the German utility company RWE acquired the company for $8.6 billion and renamed it American Water.

In November 2005, RWE announced plans to sell American Water and its water services division, RWE Thames Water. The sale was part of RWE's plan to focus on "selling electricity, natural gas and water in European markets," reported the Philadelphia Inquirer.

The Associated Press reported that RWE never saw the "heady profits" it anticipated from its "international water empire that cost more than $10 billion to assemble and spanned more than 40 countries at its height.... Water turns out to be less like electricity than RWE hoped. It's heavy and hard to transport, making it difficult for a big company to build economies of scale. Regulation is never predictable. In the US, RWE found itself fighting in town referendums and state legislatures across the country, winning many battles but losing the war.... 'People are just kind of weird with water,' says Catherine Bowie, a community-relations manager for RWE's subsidiary in California."

In April 2008, American Water shares began trading on the New York Stock Exchange at $21.50 per share, in its initial public offering of 58 million shares of common stock. The "selling stockholder" was RWE, with net proceeds from the offering going to RWE. "After the initial public offering, and assuming no exercise of the underwriters' option, the selling stockholder is expected to own approximately 64 percent of American Water's shares," according to an April 2008 American Water press release.

In December 2008, American Water announced its intention for a "follow-on public offering" of the company's common stock. "The proposed offering would include a $300 million (and up to an additional $90 million in connection with the underwriters' option to purchase additional shares) secondary offering by the selling stockholder, a subsidiary of RWE AG, with proceeds going to RWE and concurrently, a $300 million primary offering by American Water Works Company, Inc will occur with proceeds used to redeem short-term debt," according to a company press release.

Public Relations
Marketing and advertising director, MaryBeth Vrees, and senior vice-president of corporate communications, Laura Monica, started "working on a rebranding and repositioning of American Water, which includes environmental stewardship, and innovative use of technology," reported PR Week in April 2009. Part of those efforts was the company's first "interactive online annual report," launched in March 2009, meant as both a cost-savings measure (relative to traditional, printed annual reports) and a "brand awareness push." The online report also allowed American Water "to learn what has caught visitors' interest and to determine what to expand upon in the future."

In January 2009, American Water retained the public relations firm MWW Group.

Chief Executive Officer
Jeffry Sterba has been president and CEO of American Water Works Company, Inc. since August 2010. In 2012, Sterba's annual salary was $732,695. He also received $1,874,990 in stock awards and options, as well as $1,180,030 in other compensation, resulting in total compensation of $3,787,715.

Sterba has made $8,311,925 in the three years that he has been a top executive at the company.
 * 2010            $1,413,072
 * 2011            $3,111,138
 * 2012            $3,787,715
 * Total        $8,311,925

Previously, Sterba worked in senior executive positions at PNM Resources (March 2000-March 2010), an energy holding company based in Albuquerque, New Mexico. Sterba's career at the company spanned over 30 years. He began as an intern in 1997.

While Sterba was chairman, president, and CEO of PNM, the company was involved in litigation concerning the manipulation of energy prices during the 2001 energy crisis in California. California attorney general Bill Lockyer filed suit in 2005 against PNM and a Canadian company for alleged price fixing that cost Californians over $1 billion. Lockyer alleged that "Enron-devised trading schemes used to inflate prices" constituted collusion.

The case never went to trial in California courts because in 2006 federal courts ruled that the Federal Energy Regulatory Commission (FERC) held jurisdiction over electricity prices. In 2005, PNM agreed to pay $1 million to end a federal investigation of its practices during the California energy crisis.

In June 2006, Sterba was elected first vice chairman of the Edison Electric Institute, the energy industry's largest trade group. Sterba also chaired EEI's CEO Climate Change Task Force. The following year, EEI set up a website for the "Water Advocacy Coalition" to oppose the Clean Water Restoration Act in 2007, which was introduced by Senator Russ Feingold to clarify which bodies of water are subject to federal regulation. In 2007, while Sterba was at the organization, EEI spent $10.2 million in federal lobbying and opposed even the Bush administration's hesitant efforts to improve air quality standards.

In April 2011, when the West Virginia Public Service Commission refused to permit ratepayers to pay for any portion of incentive bonuses and stock awards for American Water executives, holding that "current economic conditions do not justify ratepayers bearing this expense," Sterba attacked the PSC's decision at American Water's annual meeting the following month, declaring that it was inappropriate for "shareholders to subsidize customers" and threatening to leave the state.

Two weeks after the annual meeting, American Water announced it was laying off nearly 10 percent of the company's workforce in West Virginia. This prompted a Change.org petition campaign by the Utility Workers Union of America Local 537 demanding that Sterba stop the "union busting." After a protest to the PSC, the commission blocked the layoffs in December. That year (2011), Sterba pulled down $3,111,138 in compensation from American Water, more than doubling his compensation from the previous year.

Under Sterba's leadership, American Water's labor relations have sharply deteriorated. In January 2012, the National Labor Relations Board (NLRB) issued a complaint accusing American Water of illegally cutting healthcare, retiree health, and disability benefits for 3,500 workers in fifteen states across the United States. In October 2012, an administrative law judge issued a decision holding American Water responsible for the cutbacks and ordering the company to pay back pay. In June 2013, the NLRB found that Pennsylvania American Water, a subsidiary of American Water, violated the National Labor Relations Act by threatening employees in two bargaining units for their legitimate refusal to cross union picket lines at its facilities.

Management
From 2008 to 2012, American Water's key executives made $32,232,667. This surely casts some new light on their argument that they need rate hikes from PUCs to improve water infrastructure.
 * 2008            $4,342,485
 * 2009            $2,769,443
 * 2010            $6,713,501
 * 2011            $8,719,013
 * 2012            $9,688,225
 * Total        $32,232,667

As of July 2013, these executives include:


 * Jeffry E. Sterba, President and Chief Executive Officer
 * Walter Lynch, President and Chief Operating Officer of Regulated Operations
 * Susan N. Story, Senior Vice President and Chief Financial Officer
 * Kellye Walker, Chief Administrative Officer (CAO) and General Counsel
 * Mark Strauss, Senior Vice President, Corporate Strategy and Business Development
 * John R. Bigelow, Senior Vice President, Business Services
 * Sharon C. Cameron, President - American Water Resources, Inc.
 * Robert MacLean, President - California American Water and Hawaii American Water
 * Jeff L. McIntyre, President - West Virginia American Water
 * Randy A. Moore, President - Iowa American Water
 * Cheryl Norton, President - Kentucky American Water
 * Kathy L. Pape, Senior Vice President - Mid-Atlantic Division and President - Pennsylvania American Water
 * William Rogers, Vice President and Treasurer
 * Nick O. Rowe, Senior Vice President - Central Division
 * Mark S. Smith, Vice President and Chief Information Officer
 * Karla Olson Teasley, President - Illinois American Water
 * Edward D. Vallejo, Vice President - Investor Relations
 * William M. Varley, President - New York American Water
 * William R. Walsh, President - Virginia American Water and Maryland American Water

Board of Directors
As of July 2013:


 * George MacKenzie, Non-Executive Chairman of the Board
 * Julia L. Johnson
 * William J. Marrazzo
 * Martha Clark Goss
 * Julie A. Dobson
 * Paul J. Evanson
 * Richard R. Grigg
 * Stephen P. Adik
 * Jeffry E. Sterba, President and Chief Executive Officer

Contact Information

 * American Water Corporate Headquarters
 * 1025 Laurel Oak Road
 * Voorhees, NJ 08043


 * Phone: 1-856-346-8200
 * Website: http://www.amwater.com


 * Facebook: http://www.facebook.com/weareamericanwater
 * http://www.facebook.com/NewJerseyAmericanWater
 * http://www.facebook.com/pennsylvaniaamwater


 * Twitter: http://twitter.com/americanwater
 * http://twitter.com/njamwater
 * http://twitter.com/paamwater
 * http://twitter.com/wvamwater