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Press release from Business Wire

Virginia American Water Receives New Rate Order

<p class='bwalignc'> <i>Infrastructure Improvements Drive Increase;</i> <i>Water Service Remains a Value at About a Penny a Gallon</i> </p>

Friday, December 14, 2012

Virginia American Water Receives New Rate Order11:00 EST Friday, December 14, 2012 ALEXANDRIA, Va. (Business Wire) -- Following a 10-month review, the Virginia State Corporation Commission (SCC) has issued an order that approves new rates for Virginia American Water's 58,000 customers in the City of Alexandria, the City of Hopewell, a portion of Prince George County in the Hopewell District, a portion of Prince William County, and the Eastern District service area in and around Virginia's Northern Neck. The need for a rate increase is based primarily on an estimated $12.8 million in infrastructure improvements that Virginia American Water made since 2010 to enhance water service. These improvements include water main replacement/reinforcement projects in the Alexandria, Hopewell and Prince William County service districts. In the Eastern District, Virginia American Water replaced old pumps and motors, purchased new electric generators, replaced old pipes and equipment, and installed a new water storage tank. As permitted by the SCC, Virginia American Water put into effect on July 12, 2012, the rates it proposed in its initial filing on February 6, 2012. The new rates approved by the SCC are lower than the requested rates. Virginia American Water is calculating the rate impact for customers in each district and the amount of refund that will be returned to customers. The commission's order approves an increase in base rates that will result in an increase in earnings of approximately $2.3 million per year. This rate increase, combined with an already-implemented $303,000 increase in rates for customer classifications not regulated by the commission, results in an annual revenue increase totaling approximately $2.6 million. In responding to the SCC decision, Virginia American Water President William Walsh said, “We appreciate the transparent and thorough SCC review process and the opportunity for the public to provide input. We are committed to investing in our infrastructure and treatment plants to maintain the capacity and reliability of our treatment and distribution facilities, and to serve our residential, business and industrial customers. Even with the rate increase approved by the SCC, our tap water costs about a penny a gallon - a remarkable value compared to any other utilities today.” Virginia 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 services to more than 300,000 people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs approximately 7,000 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in more than 30 states and parts of Canada. More information can be found by visiting Virginia American WaterMary-Jane Atwater,