California American Water Completes Transfer of Utility Assets to San Lorenzo Valley...

California American Water Completes Transfer of Utility Assets to San Lorenzo Valley Water District

$13.4 Million for Felton Property, Watershed Land Donated
FELTON, Calif.--(Business Wire)--
California American Water completed its transfer of ownership of
the Felton water system to the San Lorenzo Valley Water District
(SLVWD).

Under terms of the agreement, SLVWD paid $13.4 million for the
operating assets of the water system that serves approximately 1,330
customers in Felton. The payment includes a $10.5 million cash payment
to California American Water and the assumption by the District of
$2.9 million in debt related to the Safe Drinking Water Bond Act used
to build the Kirby Street water treatment plant and other facilities.

Additionally, California American Water donated all non-operating
assets of the Felton water system to the SLVWD, including 250 acres of
watershed land adjacent to Fall Creek State Park. The donation
includes a deed restriction that the timber on the land will not be
commercially harvested, preserving the land for water production,
water supply and conservation.

"We received premium value to rate base for our operating assets
and were able to protect the timberland for future generations," said
Kent Turner, president of California American Water. "I also thank our
employees, who always put the customers first and provided
high-quality, reliable service from the time we acquired the Felton
water system to the completion of this transfer. This process began
with condemnation proponents predicting that a takeover would cost as
little as $2 million and rates would be substantially reduced. Now, it
is apparent that the costs were far greater, and recent media reports
indicate the total cost to a customer's water bill, with bond
repayments, will be about the same as what he or she had already been
paying."

Former California American Water Customers in Felton should
contact SLVWD at (831) 338-2153 for all routine and emergency customer
service inquiries.

California American Water provides high-quality and reliable water
and/or wastewater services to more than 630,000 people. In addition to
its subsidiaries' regulated operations, American Water provides a
variety of operation and maintenance services in Descanso and East
Palo Alto, serving an additional 13,000 people.

California American Water is a wholly owned subsidiary of American
Water (NYSE:AWK). 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 nearly 7,000
dedicated professionals who provide drinking water, wastewater and
other related services to approximately 15.6 million people in 32
states and Ontario, Canada. More information can be found by visiting
www.amwater.com.

American Water
Kevin Tilden, 619-206-8099
Kevin.Tilden@amwater.com

www.amwater.com

Copyright Business Wire 2008