Illinois American Water rate adjustment approved by Illinois Commerce Commission

Water bill for Lincoln District customer using 4,500 gallons per month expected to increase approximately 13 cents per day, or $3.99 per month

[September 24, 2012]  Following a comprehensive, 11-month review process that included opportunities for public comment, the Illinois Commerce Commission issued a final order in Illinois American Water's rate case filed on Oct. 27, 2011. The new rates resulting from the order are expected to take effect Oct. 1, 2012. Illinois American Water cannot increase rates without ICC approval.

Pending final approval from the ICC staff, the company estimates that a residential customer in the company's Lincoln District using 4,500 gallons of water per month will pay about 13 cents more per day, or $3.99 more per month. The monthly bill will be approximately $35.74 (excludes fire protection charges, municipal taxes and franchise fees, which vary by community). Customers will continue to receive quality, reliable water service for about a penny per gallon.

Illinois American Water's ongoing enhancement and maintenance of infrastructure to ensure reliable water and wastewater treatment and delivery systems are the main drivers behind the rate change. The new rates reflect approximately $180 million in infrastructure investment statewide, and approximately $3.1 million in the Lincoln District, not reflected in base rates prior to this rate order.

According to David Schonauer, operations superintendent for Illinois American Water's Lincoln District, the $3.1 million in investments includes replacing and installing fire hydrants, valves, meters and more than 2,500 feet of water main. Upgrades made in the water treatment and delivery systems enhance water quality, water pressure and fire protection. Construction of a new pumping station at the south water treatment plant ensures reliability to customers. The pumping station uses energy-saving technology through the installation of variable frequency drive motors, which ensure motors are operated based on current pumping demands. This VFD equipment ensures improved motor operational efficiencies when supplying the current pumping demands.

"Upgrades made in the water treatment and delivery systems enhance water quality, service reliability and fire protection for customers," said Schonauer.

Many communities are facing the challenges of aging water systems and associated rate increases. The U.S. Environmental Protection Agency says the nation's water utilities will need to make more than $335 billion in infrastructure investments -- $15 billion in Illinois -- over the next 20 years to replace thousands of miles of pipe and for upgrades to treatment plants, storage tanks and other assets to ensure public health. Illinois American Water makes necessary improvements and prudent investments when needed.

"Water is a critical part of everyday life and a strong economy," said Schonauer. "We work with communities we serve to make sure we are providing high-quality water service that meets their needs and, at the same time, controlling our costs wherever possible."

Illinois American Water has worked to control costs while providing customers with good service. More than 90 percent of customers report they are satisfied or extremely satisfied with service provided by Illinois American Water.

Illinois American Water's rates are based on the true cost of providing water and wastewater service, as reviewed by the ICC. While many municipally owned water systems are able to cover costs with taxes, fees and other revenue sources as a way to keep water bills lower, investor-owned, regulated water utilities are required to recover all costs through water rates charged on the customer's water bill.

The company's last base rate increase occurred in April 2010. Customers will receive information further explaining the rate change.

Customers needing assistance paying their water bills can access the company's H2O Help to Others program. The Salvation Army administers this program. Customers are urged to contact their local Salvation Army if they need assistance. Information on the program is also available at www.illinoisamwater.com.

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Illinois American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water or wastewater services to more than 1.2 million people. American Water also operates a customer service center in Alton and a quality control and research laboratory in Belleville.

[Text from file received from Illinois American Water]