VOORHEES, N.J., July 12, 2001 — At a recent gathering of utility executives and regulatory officials, American Water Works Company President and CEO J. James Barr characterized the need to upgrade the nation's infrastructure as an issue that is routinely dealt with each day by professional water and wastewater utility managers.

"There is absolutely nothing new or particularly complicated about the issue of infrastructure replacement," Barr told those attending the Mid-Atlantic Conference of Regulatory Utilities Commissioners in White Sulphur Springs, West Virginia. "No matter what we do to extend the useful lives of ...pumps, pipes, treatment facilities, hydrants...ultimately they wear out and have to be replaced. I believe it stretches credibility to suggest that this basic, fundamental physical characteristic of any water or wastewater system is anything other than a daily routine - albeit a routine that requires huge investments."

Much of the underground infrastructure of the country's 54,000 water systems was put into place decades ago and is nearing the end of its useful lifespan.

Over the next 20 years, significant capital investment will be required to replace the aging service lines and associated equipment within all water and wastewater delivery areas. Some industry analysts have suggested that this infrastructure investment could easily top a trillion dollars and require intervention by the federal government.

A recent study by the American Water Works Association (AWWA) — an international nonprofit scientific and educational society dedicated to the improvement of drinking water quality and supply - concluded the investment is likely to be closer to $250 billion over 20 years.

"Whatever the final cost," Barr told the conference participants, "it's certainly manageable at the local level without federal intervention." He noted that since the early 70s, American Water invested more than $6 billion or roughly $2,000 per customer in the infrastructure. "That investment was funded by private investors," Barr explained. "As a result of that investment, and the decline over time in water use per customer, the price of water service has risen. Even so, water remains a bargain for the consumer.

"I believe these statistics offer compelling evidence," Barr continued, "that through the combined efforts and intestinal fortitude of utility officials and economic regulators, we've taken the steps to secure reliable service for our customers. At the same time, the figures disprove the contention that the cost of service cannot be supported through rates for service."

Barr concluded his remarks by challenging the conference participants to "become actively involved in the infrastructure debate ...and demand that public policy, not politics, become the focus of the solution."

American Water Works Company is the nation's largest and most geographically diverse publicly traded utility devoted exclusively to the water and wastewater business. Its subsidiaries serve more than 10 million people in 1,300 communities in 23 states from New York to Hawaii.

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