Public Water and Sewer Affordability Meg Neafsey American Water April 30, 2015

Water is a great value, but… American Water believes that water service should be priced to reflect its true value. We also believe that the adverse economic impacts on vulnerable customers can and should be addressed through targeted assistance programs. American Water’s state subsidiaries help customers to lower their costs with household retrofits, conservation programs, payment programs and financial assistance

Low Income Programs State subsidiary programs for low-income customers vary and must be reviewed and approved by utility regulatory commissions in the states in which American Water operates. H2O Help to Others (NJ, MO, IL, TN, KY, IA, VA) and Dollar Energy (PA, WV) are grant programs funded by company with some customer donations and administered by 3rd parties. (PA)(NJ) discount the fixed charges for low income customers (WV) offers a program to provide a 20 percent discount on current residential water rates for certain low income households (CA)provides to qualified low income residential customers a monthly bill credit. 3

Other Programs American Water subsidiaries may also assist low-income and other customers by:  Distributing water efficiency kits to raise awareness about what daily steps can be taken to lower water usage and costs  Conducting free water audits for single- and multi-family customers to improve water efficiency, reduce leaks, and ultimately help them save money  Payment Arrangements - customer service representatives work with customers on a plan to pay the balance of the bill over time.  Budget billing - American Water’s residential customers have the option of paying bills under the Company’s Budget Billing Plan. 4

Other Efforts to Keep Service Affordable Work extensively with Public Utility Commissions to set an appropriate price for water that accounts for infrastructure investments, and service and customer impact.  Water infrastructure surcharges – 50 percent of capital investments in 2015 will be covered by infrastructure mechanisms. These mechanisms provide a more timely return on these investments and help to moderate bill impacts to our customers  O&M efficiency efforts - drive costs down and increase the amount of investment. We can invest around $6 for every $1 of O&M we save with the same customer bill impact, so this is a very important piece of our strategy. 5