Final Approval Granted to Fund Tubac Drinking Water Facility

Federal Stimulus Package Funds Will Aid Compliance with U.S. EPA Drinking
Water Standards

PHOENIX, June 26 /PRNewswire/ -- Today WIFA (Water Infrastructure Finance
Authority) approved the Arizona American Water loan grant application to
receive funding from the Federal Stimulus Package Funds.

"We congratulate our customers, and thank all the people involved especially
Kristin Mayes, Chairman of the Arizona Corporation Commission for making this
happen," said Joe Gross, Director of Engineering. "The construction started
earlier this month, and we are happy to move forward with finalized approval
from WIFA today on a project that will have significant positive impact."

Securing these funds was part of Arizona American Water's effort along with
leadership from the town of Tubac and the Arizona Corporation Commission to
mitigate the cost impact to customers of unfunded and more stringent federal
requirements. Heavy construction isn't expected until late summer. It is
expected that the arsenic removal facility will be in service by the end of
this year.

In April, WIFA announced that residents of Tubac who receive water service
from Arizona American Water will benefit from a combination of federal grants
and loans. Arizona American Water applied for the full 2.3 million dollars to
fund the arsenic removal facility; however, final disbursements will not be
determined by WIFA until after the project is completed. The federal funds
will be used by Arizona American Water to construct an arsenic removal
facility in Tubac; construction is expected to begin in June. The removal
facility is needed to bring local drinking water into compliance with new
stringent US EPA standards for arsenic levels in drinking water. WIFA is
responsible for administering funds provided to the State of Arizona from the
Federal Stimulus Package for water and sewer projects.

In January of 2001, the Environmental Protection Agency reduced the amount of
arsenic allowable in drinking water from 50 parts per billion to 10 parts per
billion. Arsenic is naturally occurring in the southwest and the new mandate
impacted hundreds of groundwater water systems in Arizona.

Arizona American Water - Arizona American Water, a wholly owned subsidiary of
American Water (NYSE: AWK), is the largest investor-owned water utility in the
state, providing high-quality and reliable water and/or wastewater services to
more than 200,000 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 15 million people in 32
states and Ontario, Canada. More information can be found by visiting
www.amwater.com.

SOURCE Arizona American Water

Joni McGlothlin of Arizona American Water, +1-623-445-2456,
joni.mcglothlin@amwater.com