American Water Works (AWK) 10-K risk factor changes: FY2021 vs FY2020

In addition to the other information included or incorporated by reference in this [added: Annual Report on] Form 10-K, the following material factors should be considered in evaluating our business and future prospects.

Our [removed: utility operations] [added: Regulated Businesses] are subject to extensive regulation by state PUCs and other regulatory agencies, which significantly affects our business, financial condition, results of operations and cash flows.

Our [removed: utility operations] [added: Regulated Businesses] also may be subject to fines, penalties and other sanctions for an inability to meet these regulatory requirements.

[removed: Our utilities are] [added: Approval by the PUCs is] also required [added: in connection with other aspects of our Regulated Businesses, which are required] to have numerous permits, approvals and certificates from the PUCs that regulate their businesses and authorize acquisitions, dispositions, debt and/or equity financing, and, in certain cases, affiliated transactions.

PUCs and other governmental authorities have taken, and may continue to take, emergency or other actions in light of the [added: on-going] COVID-19 pandemic that may impact us, including prohibiting the termination of service for non-payment [removed: during the current COVID-19 pandemic] and extending or delaying procedural schedules in our regulatory proceedings.

[removed: At this time, we] [added: We] are unable to predict the range of impacts that the [added: ongoing] COVID-19 pandemic and other related events may have on our ability to obtain these approvals as needed or requested by [removed: the] [added: our] Regulated Businesses in the ordinary course or at all, or the nature [added: or impacts] of any further emergency or other action that may be taken by the PUCs or other governmental authorities.

This could occur if certain conditions exist, including, but not limited to, water usage [added: is] less than the level anticipated in establishing rates, customers increase their conservation efforts, or we experience [removed: negative] [added: unanticipated] impacts of the [added: on-going] COVID-19 pandemic, or if our investments or expenses prove to be higher than the levels estimated in establishing rates.

[added: If we deliver water or wastewater services to our customers] that do not comply with regulatory standards, or otherwise violate environmental laws, regulations or permits, or other health and safety and water quality regulations, we could incur substantial fines, penalties or other sanctions or costs, as well as damage to our reputation.

In the most serious cases, regulators could reduce requested rate increases or force us to discontinue operations and sell our [removed: operating assets to another utility or to a municipality.]

We may also incur liabilities if, under environmental laws and regulations, we are required to investigate and clean up environmental contamination, including potential releases of hazardous chemicals, such as chlorine, which we use to treat water, or at off-site locations where we have disposed of [added: residual] waste or caused an adverse environmental impact.

Examples of sources of contaminants include, but are not limited to, newly created chemical compounds (including, for example, manufactured nanomaterials); human and veterinary products; perfluorinated and polyfluorinated compounds; bacteria, microbes, viruses (including the [removed: current novel] coronavirus), amoebae and other pathogens; and residual by-products of disinfection.

As a result, we typically do not own the [added: source] water that we use in our operations, and the availability of our water supply is established through allocation rights (determined by legislation or court decisions) and passing-flow requirements set by governmental entities or by entering into water purchase agreements.

For example, in our Monterey County, California operations, we are seeking to augment our sources of water supply, principally to comply with an October 2009 cease and desist order (the “2009 Order”), as amended by a July 2016 order (the “2016 Order”), of the SWRCB that requires our California subsidiary to significantly decrease its diversions from the Carmel River in accordance with a reduction schedule that [removed: terminates] [added: terminated] on December 31, 2021 (the “2021 Deadline”).

[added: We are] also required to augment our Monterey County sources of water supply to comply with the requirements of the Endangered Species Act.

[removed: Failure by our California subsidiary] [added: While the Company cannot currently predict the likelihood or result of any adverse outcome associated with these matters, further attempts] to comply with the 2009 Order and the 2016 Order [removed: in whole or in part, or the 2021 Deadline,] may result in material additional costs or obligations, including fines and [removed: penalties,] [added: penalties against our California subsidiary in the event of noncompliance with the 2009 Order and the 2016 Order,] which could have a material adverse effect upon us and our business, results of operations and cash flows.

[removed: Climate variability] [added: Climate variability] may cause increased volatility in weather and may impact water usage and related revenue or require additional expenditures, all of which may not be fully recoverable in rates or otherwise.

[removed: Some scientific experts are predicting a] [added: There is consensus among climate scientists that there will be] worsening of weather volatility in the future associated with climate variability.

Many climate variability [removed: predictions, if true,] [added: predictions] present several potential challenges to water and wastewater utilities, including us, such as:

- increased costs to reduce risks associated with the increasing frequency [added: and severity] of natural events, including to improve the resiliency and reliability of our water and wastewater treatment and conveyance facilities and systems.

Although some or all potential expenditures and costs associated with the impact of climate variability and related laws and regulations on our Regulated Businesses could be recovered through rates, infrastructure replacement surcharges or other regulatory mechanisms, there can be no assurance that state PUCs would authorize rate increases to enable us to recover such [removed: expenditures and costs, in whole or in part.]

The current regulatory rate setting process may result in a significant delay, also known as “regulatory lag,” from the time that we invest in infrastructure improvements, incur increased operating expenses [added: as a result of inflation] or [added: other factors, incur increased cost of capital, including as a result of increasing short- and long-term rates, or] experience declining water usage, to the time at which we can seek to address these events in rate case applications; our inability to mitigate or minimize regulatory lag could adversely affect our business.

There is typically a delay, known as “regulatory lag,” between the time [removed: one of] our [removed: regulated subsidiaries makes] [added: Regulated Businesses make] a capital investment or [removed: incurs] [added: incur] an operating expense increase and the time when those costs are reflected in rates.

For example, [removed: three] [added: two] of our states have approved revenue stability mechanisms that adjust rates periodically to ensure that a utility’s revenue will be sufficient to cover its costs regardless of sales volume, including recognition of declining sales resulting from reduced consumption, while providing an incentive for customers to use water more efficiently.

In addition, [removed: 11] [added: 10] of our state PUCs permit rates to be adjusted outside of the general rate case application process through surcharges that address certain capital investments, such as replacement of aging infrastructure.

Furthermore, in setting rates, [removed: ten] [added: nine] of our state PUCs allow us to use future test years, which extend beyond the date a rate request is filed to allow for current or projected revenues, expenses and investments to be reflected in rates on a more timely basis.

While these mechanisms have mitigated or reduced regulatory lag in several of our regulated states, we continue to seek [removed: expansion] [added: approval] of regulatory practices to mitigate or reduce regulatory lag in those jurisdictions that have not approved them.

Although we intend to continue our efforts to [removed: expand] [added: seek] state PUC approval of [removed: surcharges] [added: constructive regulatory practices] to [removed: address issues of] [added: mitigate or reduce] regulatory lag, our efforts may not be successful, or even if [removed: successful they may not completely address our regulatory lag, in which case] [added: partially successful,] our business, financial condition, results of operations, cash flows and liquidity may be materially and adversely affected.

[removed: New legislation,] [added: Changes in laws or] regulations, [added: the imposition of additional laws and regulations, changes in enforcement practices of regulators,] government policies or court [removed: decisions, including, without limitation with respect to federal and state income and other tax laws,] [added: decisions] can materially affect our operations, results of operations and cash flows.

Therefore, elections which result in a change of political administration or new appointments may also result in changes of [removed: certain of] the individuals who serve as regulators and [added: changes in] the policies of the regulatory agencies that they serve.

[removed: An example of an area in which laws] [added: Laws] and regulations are changing and increasing rapidly [removed: is] with respect to data and consumer privacy, security and protection.

We are becoming subject to an increasing number of [added: complex and continually evolving] data and consumer privacy, security and protection laws and regulations administered by various federal, state and local governments, including, for example, the California Consumer Privacy Act of 2018.

Any failure or perceived failure by us to comply with current or future federal, state, or local data or consumer privacy or security laws, regulations, policies, guidance, industry standards, or legal obligations, or any incident resulting in unauthorized access to, or acquisition, release, or transfer of personally identifiable information or other data relating to our customers, employees and others, may result in private or governmental enforcement actions, [removed: litigation,] [added: litigation or other claims against us,] fines and penalties, or adverse perception or publicity about us and our businesses, which could have a material adverse effect on our reputation and business and could result in us incurring substantial costs.

These events could also [added: require us to change our business practices, and the events or such changes may] result in significant diversions of resources, distract management and divert the focus and attention of our security and technical personnel from other critical activities.

Adverse economic conditions, [added: including] the COVID-19 pandemic or other [removed: factors] [added: factors,] may cause our customers, particularly industrial and large commercial customers, to curtail operations.

Any decrease in demand resulting from difficult economic conditions [removed: or the current COVID-19 pandemic] affecting these customers could adversely affect our financial condition and results of operations.

Our Regulated Businesses require significant capital expenditures and may suffer if we fail to secure appropriate funding to make investments, [added: experience increases in short- and long-term interest rates] or if we experience delays in completing major capital expenditure projects.

In [removed: 2020,] [added: 2021,] we invested $1.8 billion in net Company-funded capital improvements.

The level of capital expenditures necessary to maintain the integrity of our systems will continue into the future [removed: and may] [added: and, we believe, will] increase.

We expect to fund capital improvement projects using cash generated from [removed: operations,] [added: operations (including, among other things, a portion of the net proceeds from the sales of HOS and our New York subsidiary),] borrowings under our revolving credit facility and commercial paper programs and issuances of long-term debt and equity.

Even with adequate financial resources to make required capital expenditures, we face the additional risk that we will not complete our major capital projects on time, as a result of [added: supply chain interruptions,] construction delays, permitting delays, labor shortages or other disruptions, environmental restrictions, [removed: or other obstacles.][added: legal and]

operating assets to another utility or to a municipality.

Beginning in January 2022, Cal Am currently expects that it will be able to comply with the diversion reduction requirement schedule contained in the 2016 Order, but continued compliance with the diversion reduction requirements for 2023 and future years

will depend on successful development of alternate water supply sources sufficient to meet customer demand.

The 2009 Order and the 2016 Order remain in effect until Cal Am certifies to the SWRCB, and the SWRCB concurs, that Cal Am has obtained a permanent supply of water to substitute for past unauthorized Carmel River diversions.

expenditures and costs, in whole or in part.

The impact of any future revisions or changes in interpretations of existing regulations or the adoption of new laws and regulations applicable to our Regulated Businesses is uncertain.

regulatory challenges, or other obstacles.

Our business is subject to complex and evolving federal, state and local laws and regulations regarding consumer privacy and the protection or transfer of data relating to individuals, which could result in, among other things, private or governmental claims or litigation against us, changes to our business practices, monetary penalties, reputational harm and increased cost of operations.

Our insurance programs have

Although we make efforts to minimize any

Disruptions in our supply chain related to goods, such as pipe, chemicals, fuel, electricity, equipment, water and other raw materials, and services, could adversely impact our operations and our ability to serve our customers, as well as our financial results.

Our ability to serve our customers and operate our business in compliance with regulatory requirements is dependent upon purchasing or securing necessary goods and services from our suppliers and vendors.

These items include but are not limited to contracted services, chemicals, pipe, valves, hydrants, fittings, fuel, equipment (including personal protective equipment), water and electricity.

Examples of supply chain disruptions include reduced quantities of goods available in the marketplace, delays in manufacturing or shipping goods, labor shortages at our suppliers or vendors, natural disasters and operational impacts to some of our suppliers or vendors.

Disruptions in our supply chain related to goods and services have occurred and we anticipate will continue to occur into the foreseeable future.

Supply chain disruptions may cause us to be unable to purchase or otherwise obtain needed goods or services at a reasonable price or at all, and may significantly increase the price of goods and services we may obtain from suppliers and vendors.

This, in turn, may adversely impact our operations and our ability to serve our customers in compliance with regulatory requirements, as well as our associated results of operations, cash flows and financial condition.

While we attempt to plan for and have contingencies in place to address supply chain disruptions, our mitigation efforts may not be successful or may have further negative impacts on us.

We repaid this term loan facility in full in March 2021.

Approval of the PUCs is also required in connection with other aspects of our utilities’ operations.

The current COVID-19 pandemic may limit or curtail significantly or entirely the ability of PUCs to approve or authorize applications and other requests we may make with respect to our Regulated Businesses, including without limitation any or all types of approvals described above, as PUCs and their staffs seek to reduce, delay or streamline proceedings and other activities.

If we deliver water or wastewater services to our customers

[Table](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7) [of](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7) [](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7)[Contents](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7)

We are

We cannot predict whether our California subsidiary will be able to secure alternative sources of water, or if it will be able to meet the 2021 Deadline or the diversion reduction and other remaining requirements under the 2009 Order and the 2016 Order.

For example, during 2020, the Company experienced a decrease in net customer demand related mainly to industrial and commercial customers, which the Company believes to be attributable to the impacts of the COVID-19 pandemic.

For example, our New York subsidiary experienced increased customer and regulatory scrutiny related to an investigation by the New York State Public Service Commission (the “NYSPSC”) of the unintentional provision by our New York subsidiary of incorrect data to a taxing authority and the failure of a few employees of that subsidiary to properly disclose these issues in a rate case.

A settlement of this investigation was approved by the Supreme Court of the State of New York in September 2018.

In November 2020, the MPWMD certified an FEIR with respect to a proposed acquisition and operation of this system by the MPWMD, and our California subsidiary has filed a petition in court challenging this certification.

No further borrowings may be made under the term loan facility.

other consolidated indebtedness is subject to various risks and uncertainties, including events beyond our control.

With the enactment in December 2017 of the TCJA, we analyzed the impacts of the reduction in the U.S. federal corporate income tax rate from 35% to 21% on our deferred tax assets and liabilities, including our NOL carryforwards, and as a result, remeasured those NOL carryforwards as of the date of enactment of the TCJA based on this tax rate change.

We expect to fully utilize our federal NOL balance before it expires, and our ability to do so is primarily dependent upon our ability to generate sufficient taxable income.

Moreover, adoption of Related Interpretations with respect to the TCJA and other changes in income tax laws, the economy and the general business environment could affect the future utilization of our NOL carryforwards.

For example, in the third quarter of 2018, prior to our sale of our former Keystone Clearwater Solutions (“Keystone”) operations, we strategically narrowed the scope of that business and, as a result, we recorded a non-cash, pre-tax impairment charge of $57 million.

As the COVID-19 pandemic continued throughout 2020, the stock market would often experience significant day-to-day fluctuations in market prices.

*The following discussion should be read together with the Consolidated Financial Statements and the Notes thereto included elsewhere in this [added: Annual Report on] Form 10-K.

The [added: disclosure] committee is actively involved in the review and discussion of the Company’s SEC filings.

For a discussion and analysis of the Company’s financial statements for fiscal [removed: 2019] [added: 2020] compared to fiscal [removed: 2018,] [added: 2019,] please refer to Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] filed with the SEC on February [removed: 18, 2020.*][added: 24, 2021.*]

The Company employs approximately [removed: 7,000] [added: 6,400] professionals who provide drinking water, wastewater and other related services to over [removed: 15] [added: 14] million people in [removed: 46] [added: 24] states.

The Company’s primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers, collectively presented as the “Regulated Businesses.” The Company’s utilities operate in [removed: over] [added: approximately] 1,700 communities in [removed: 16] [added: 14] states in the United States, with [removed: 3.5] [added: 3.4] million active customers with services provided by its water and wastewater networks.

The Company also operates [added: other] market-based businesses that provide water, wastewater and other services to residential and smaller commercial customers, the U.S. government on military installations, as well as municipalities and utility customers, collectively presented as the “Market-Based Businesses.” These Market-Based Businesses are not subject to economic regulation by state PUCs.

[removed: Novel Coronavirus (COVID-19)] [added: COVID-19] Pandemic Update

American Water [removed: has been monitoring] [added: continues to monitor] the [removed: global impact of] COVID-19 pandemic and has taken steps [added: since the beginning of the pandemic] to mitigate adverse impacts to the Company.

American Water continues to work with its vendors to prevent disruptions in its supply chain, and, at this time, has not experienced, and does not anticipate, any material [removed: negative impacts.][added: disruptions.]

[removed: To date, the] [added: The] Company has experienced [removed: COVID-19] financial [removed: impacts, including] [added: impacts since the beginning of the pandemic resulting from lower revenues from the suspension of late fees and foregone reconnect fees in certain states, certain incremental O&M expenses,] an increase in uncollectible accounts [removed: expense,] [added: expense and] additional debt [removed: costs, and certain incremental operation and maintenance (“O&M”) expenses.][added: costs.]

These impacts are collectively referred to as “financial impacts.” See Note 3—Impact of [removed: Novel Coronavirus (COVID-19)] [added: the COVID-19] Pandemic in the Notes to Consolidated Financial Statements for additional information.

The extent to which [added: the] COVID-19 [added: pandemic] may further impact American Water, including without limitation, its liquidity, financial condition, and results of operations, will depend on future developments, which presently cannot be predicted.

As of February [removed: 24, 2021,] [added: 16, 2022,] American Water has commission orders authorizing deferred accounting [added: or cost recovery] for COVID-19 financial impacts in 11 of [removed: 14 jurisdictions, with proceedings in two jurisdictions pending.][added: 13 jurisdictions.]

[removed: Regulatory] [added: Other regulatory] actions to date are presented in the table below:

| Orders issued [added: with deferred accounting] | | | | | | Allows the Company to establish regulatory assets to record certain financial impacts related to the COVID-19 pandemic. | | | | | | [removed: CA,] HI, [removed: IA, IL,] IN, MD, [removed: MO,] NJ, PA, VA, WV | | |

| [removed: Cost] [added: Orders issued with cost] recovery [removed: mechanisms] | | | | | | California’s Catastrophic Event Memorandum Account allows the [removed: Company] [added: Company’s California subsidiary] to track [removed: and recover] certain financial impacts related to the COVID-19 [removed: pandemic.] [added: pandemic for future recovery requests. Iowa issued a base rate case order on June 28, 2021, authorizing recovery in rates of the COVID-19 financial impacts deferred within its annual non-recurring expense rider.] Illinois has authorized cost recovery of [added: the] COVID-19 financial impacts through a special purpose rider over a 24-month period, which was implemented [removed: by the Company’s Illinois subsidiary] effective October 1, 2020. Additionally, Illinois approved a bad debt rider tariff on December 16, [removed: 2020. This rider will allow the Company to collect] [added: 2020, allowing collection of] actual bad debt expense over last authorized beginning [added: April 2021 through February 2023. Illinois approved a stipulation in] March 2021 [added: to allow the rider to be extended through the end of 2023. Missouri issued a base rate case order on April 7, 2021, authorizing recovery in rates of the COVID-19 financial impacts deferred through March 31, 2021] over a [removed: 24-month] [added: three-year] period. | | | | | | CA, [removed: IL] [added: IA, IL, MO] | | |

Consistent with these regulatory orders, the Company has recorded [removed: $30] [added: $36] million in regulatory assets and [removed: $4] [added: $6] million of regulatory liabilities for the financial impacts related to the COVID-19 pandemic on the Consolidated Balance Sheets as of December 31, [removed: 2020.][added: 2021.]

[removed: On] [added: In] December [removed: 30,] 2020, the [removed: Company’s] Kentucky [removed: subsidiary received] [added: Public Service Commission issued] an order denying [removed: its] [added: a] request to defer to a regulatory asset the financial impacts related to the COVID-19 pandemic.

The moratoria on disconnects have expired in [removed: eight] [added: 12] states.

The Company continues to monitor the [removed: evolving] COVID-19 pandemic and will continue to comply with the current ordered moratoria and any future moratoria implemented.

To ensure adequate liquidity given the impacts of the COVID-19 pandemic on debt and capital markets, on March 20, 2020, [removed: parent company and American Water Capital Corp. (“AWCC”), parent company’s wholly owned finance subsidiary,] [added: AWCC] entered into a Term Loan Credit [removed: Agreement that provides for a 364-day term loan facility of up to $750 million] [added: Agreement, by and among parent company, AWCC and the lenders party thereto] (the “Term Loan Facility”).

[removed: On March 20, 2020, AWCC borrowed $500 million under the Term Loan Facility, the] [added: The net] proceeds [removed: of which] were used for general corporate purposes of AWCC and American [removed: Water,] [added: Water] and to provide additional liquidity.

See Note [removed: 13—Short-Term Debt] [added: 6—Acquisitions and Divestitures] in the Notes to [added: the] Consolidated Financial Statements for additional information.

On [removed: April 14, 2020,] [added: May 10, 2021,] AWCC completed a [removed: $1.0] [added: $1.1] billion debt [removed: offering] [added: offering,] which included the sale of [removed: $500] [added: $550] million aggregate principal amount of its [removed: 2.80% senior notes] [added: 2.30% Senior Notes] due [removed: 2030] [added: 2031] and [removed: $500] [added: $550] million aggregate principal amount of its [removed: 3.45% senior notes] [added: 3.25% Senior Notes] due [removed: 2050.][added: 2051.]

Net proceeds of this offering were used to lend funds to parent company and its regulated subsidiaries, [removed: repay various] [added: to prepay $327 million in aggregate principal amount of AWCC’s outstanding] senior [removed: notes and regulated subsidiary debt obligations at maturity,] [added: notes, to] repay [added: AWCC’s] commercial paper obligations and [removed: short-term indebtedness under AWCC’s unsecured revolving credit facility, and] for general corporate purposes.

For the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] diluted earnings per share (GAAP) were [removed: $3.91, $3.43] [added: $6.95, $3.91] and [removed: $3.15,] [added: $3.43,] respectively.

In [removed: 2020,] [added: 2021,] as compared to [removed: 2019,] [added: 2020,] diluted earnings per share increased [removed: $0.48.][added: $3.04.]

This increase was primarily driven by [added: a pre-tax gain on sale of $748 million relating to the sale of HOS and] continued growth in the Regulated Businesses from infrastructure investment, acquisitions and organic [removed: growth, as well as the benefit from depreciation expense related to the assets of the Company’s New York subsidiary, as required by assets held for sale accounting.][added: growth.]

[removed: Growth—through capital investment] [added: Growth Through Capital Investment] in [removed: infrastructure] [added: Infrastructure] and [removed: regulated acquisitions, as well as strategic growth opportunities in the Market-Based Businesses][added: Regulated Acquisitions]

In [removed: 2020,] [added: 2021,] the Company invested $1.9 billion, primarily in the Regulated Businesses, as discussed below:

- $135 million to fund [removed: acquisitions] [added: acquisitions, including deposits discussed below,] in the Regulated Businesses, which added approximately [removed: 37,800] [added: 20,000] water and wastewater customers during [removed: 2020,] [added: 2021,] in addition to approximately [removed: 14,500] [added: 17,500] customers added through organic growth during [removed: 2020.][added: 2021.]

During [removed: 2021,] [added: 2022,] the Company closed on the acquisition of two regulated water and wastewater systems adding approximately [removed: 600] [added: 700] customers, for a total aggregate purchase price of [removed: $3] [added: $2] million.

As of February [removed: 24, 2021,] [added: 16, 2022,] the Company has entered into agreements for pending acquisitions in the Regulated [removed: Businesses] [added: Businesses, including the York City Sewer Authority and Egg Harbor City agreements discussed above,] to add approximately [removed: 30,000] [added: 77,000] additional customers.

The Company’s regulated New York operations [removed: have] [added: represented] approximately [removed: 125,000] [added: 127,000] customers in the State of New York.

See Item 1—Business—Regulated [removed: Businesses—Sale of New York American Water Company, Inc.] [added: Businesses—*Regulation and Rate Making*] for additional information.

The assets and related liabilities of the New York subsidiary were classified as held for sale on the Consolidated Balance Sheets as of December 31, [removed: 2020.][added: 2021.]

- capital investment for infrastructure improvements in the Regulated Businesses [removed: of $8.9] [added: between $11.5] billion [added: to $12 billion] over the next five years, and between [removed: $19] [added: $25] billion [removed: and $21] [added: to $28] billion over the next 10 years, including [removed: $1.6] [added: $2] billion expected in [removed: 2021;] [added: 2022;] and

- growth from acquisitions in the Regulated Businesses to expand the Company’s water and wastewater customer base of between [removed: $1.4] [added: $1.5] billion to [removed: $1.6] [added: $2] billion over the next five years, and between $3 billion to $4 billion over the next 10 years, including [removed: $300] [added: $500] million expected in [removed: 2021.][added: 2022.]

[removed: ][added: ]

The Company’s adjusted regulated O&M efficiency ratio, which is used as a measure of the operating performance of the Regulated Businesses, was [removed: 34.3%] [added: 34.1%] for the year ended December 31, [removed: 2020,] [added: 2021,] compared to [removed: 34.5% and] [added: 34.3%] for the year ended December 31, [removed: 2019.][added: 2020.]

The Company also continues to monitor the impacts of the COVID-19 pandemic on the capital markets, including impacts that could increase its cost of capital.

The Company’s Pennsylvania subsidiary filed for a request with the Pennsylvania Public Utility Commission (the “PaPUC”) to defer as a regulatory asset all identified COVID-19 financial impacts.

On September 15, 2021, the PaPUC issued an order approving the Company’s request to defer, with carrying costs, incremental uncollectible expense and other incremental costs net of savings attributed to the COVID-19 pandemic.

The PaPUC order denied the request to include lost revenues attributed to the waiver of late fees and reconnect fees and expenses associated with additional interest costs.

Additionally, the PaPUC order approved the request to allow for the continuation of the deferral of financial impacts, rejecting proposals from the intervening parties to define an end date to the deferral in 2021.

As a result of the order discussed above, the Company recorded a net $7 million reduction to its regulatory assets and corresponding impacts to revenue, interest expense and uncollectible expense during the third quarter of 2021.

The Company continues to evaluate options within its next base rate case to address these denied items and the resulting financial impact.

On July 28, 2021, the Company’s Tennessee subsidiary filed a stipulation and settlement agreement with the Consumer Advocate Unit in the Financial Division of the Office of the Tennessee Attorney General, which reflected agreement on the deferral of COVID-19-related financial impacts through April 30, 2021.

On August 9, 2021, the Tennessee Public Utility Commission denied the stipulation and settlement agreement and moved to address the Company’s Tennessee subsidiary’s petition to defer the COVID-19 financial impacts in a future hearing.

On August 26, 2021, the Company’s Tennessee subsidiary filed a motion to withdraw its pending petition, preserving its right to seek recovery of the COVID-19 financial impacts in a future proceeding.

As of February 16, 2022, one state, New Jersey, continues moratoria until March 15, 2022, on the suspension of service disconnections due to non-payment.

In 2019, the Company completed and submitted its project completion certification to the New Jersey Economic Development Authority (“NJEDA”) in connection with its capital investment in its corporate headquarters in Camden, New Jersey.

The NJEDA determined that the Company is qualified to receive $164 million in tax credits over a ten-year period.

The Company is required to meet various annual requirements in order to monetize one-tenth of the tax credits annually and is subject to a claw-back period if the Company does not meet certain NJEDA requirements of the tax credit program in years 11 through 15.

The Company has made the necessary annual filings for the years ended December 31, 2019 and 2020 and expects to make the 2021 filing by April 30, 2022.

As a result, the Company had receivables of $49 million and $115 million in other current assets and other long-term assets, respectively, on the Consolidated Balance Sheets as of December 31, 2021.

The submitted filings are under review by the NJEDA and it is expected that the Company will receive final NJEDA approval and monetize the credits in the first half of 2022.

In March 2020, in connection with the COVID-19 pandemic, the NJEDA, pursuant to Executive Order 103 - State of Emergency and a Public Health Emergency, temporarily waived the requirement that a full-time employee must spend at least 80% of his or her time at the qualified business facility (“QBF”) to meet the definition of eligible position or full-time job.

The waiver will continue for as long as New Jersey’s Executive Order 281 is valid.

On July 2, 2021, New Jersey’s Governor approved a bill that revised provisions of the Economic Recovery Act of 2020 and other economic development programs, including amending the definition of an eligible position and full-time job in the Grow New Jersey Program and replacing the 80% requirement of time spent at the QBF.

The bill states that an eligible position is one that is filled by a full-time employee who has their primary office at the QBF and spends at least 60% of their time at the QBF.

The bill specifically states that it supersedes the existing regulations and existing incentive agreements that require an eligible employee spend at least 80% of their time at the QBF.

Sale of Homeowner Services Group

On the Closing Date, the Company sold all of the equity interests in subsidiaries that comprised HOS to the Buyer for total consideration of approximately $1.275 billion, resulting in a pre-tax gain on sale of $748 million.

The consideration is comprised of $480 million in cash, a seller promissory note issued by the Buyer in the principal amount of $720 million, and a contingent cash payment of $75 million payable upon satisfaction of certain conditions on or before December 31, 2023.

The structure of the transaction enables the initial cash proceeds to be redeployed into the Regulated Businesses to fund near-term incremental capital investments, while interest on the seller note provides a stream of earnings during its term.

Upon maturity, the proceeds from the repayment of the seller note are expected to be used to fund capital investment in the Regulated Businesses.

This sale narrowed the focus of the Company’s Market-Based Businesses primarily to MSG.

The seller note has a five-year term, is payable in cash, and bears interest at a rate of 7.00% per year during the term.

The repayment obligations of the Buyer under the seller note have been secured by a first priority security interest in certain property of the Buyer and the former HOS subsidiaries, including their cash and securities accounts, as well as a pledge of the equity interests in each of those subsidiaries, subject to certain limitations and exceptions.

The seller note requires compliance with affirmative and negative covenants (subject to certain conditions, limitations and exceptions), including a covenant limiting the incurrence by the Buyer and certain affiliates of additional indebtedness in excess of certain thresholds, but does not include any financial maintenance covenants.

Beginning December 9, 2024, the Company has a put right pursuant to which it may require the seller note to be repaid in full at par, plus accrued and unpaid interest, except that upon the occurrence of a disruption event in the broadly syndicated term loan “B” debt financing market, repayment by the Buyer pursuant to the Company’s exercise of the put right will be delayed until the market disruption event ends.

The seller note may not be prepaid at the Buyer’s election except in certain limited circumstances before the fourth anniversary of the Closing Date.

If the Buyer seeks to repay the seller note in breach of this non-call provision, an event of default will occur under the seller note and the Company may, among other actions, demand repayment in full together with a premium ranging from 105.5% to 107.5% of the outstanding principal amount of the loan and a customary “make-whole” payment.

The Company and the Buyer also entered into a revenue share agreement, pursuant to which the Company is to receive 10% of the revenue generated from customers who are billed for home warranty services through an applicable Company subsidiary (an “on-bill” arrangement), and 15% of the revenue generated from any future on-bill arrangements entered into after the closing.

Unless earlier terminated, this agreement has a term of up to 15 years, which may be renewed for up to two five-year periods.

On May 10, 2021, American Water Capital Corp. (“AWCC”) completed a $1.1 billion debt offering, which included the sale of $550 million aggregate principal amount of its 2.30% senior notes due 2031 and $550 million aggregate principal amount of its 3.25% senior notes due 2051.

As a result of AWCC’s prepayment of the various senior notes, a make-whole premium of $15 million was paid to the holders thereof on June 14, 2021.

Substantially all of the early debt extinguishment costs were allocable to the Company’s utility subsidiaries and recorded as regulatory assets, as the Company believes they are probable of recovery in future rates.

Selected Financial Data

The Company has also been monitoring the impacts of the pandemic on its access to the capital markets, and to the extent such access is adversely affected, American Water may need to consider alternative sources of funding for its operations and for working capital, any of which could increase its cost of capital.

This pandemic continues to evolve, and American Water continues to monitor developments affecting its employees, customers, contractors and vendors and will take additional actions as warranted.

The Company has also experienced decreased revenues as a result of the suspension of late fees and foregone reconnect fees.

In addition to approving deferred accounting, to date, two regulatory jurisdictions have also approved cost recovery mechanisms for specified COVID-19 financial impacts.

| Proceedings pending | | | | | | Pending proceedings considering deferred accounting authorization for the future recovery of COVID-19 financial impacts. | | | | | | NY, TN | | |

As of February 24, 2021, six states have ordered active moratoria on the suspension of service disconnections due to non-payment.

The Term Loan Facility allowed for a single additional borrowing of up to $250 million, which expired unused on June 19, 2020.

The Company sought to take advantage of lower interest rates available in the capital markets in 2020 by refinancing long-term debt, where possible.

In 2020, AWCC and the Company’s regulated subsidiaries issued in the aggregate $311 million of private activity bonds and government funded debt in multiple transactions with annual interest rates ranging from 0.60% to 1.20%, maturing in 2023 to 2027.

The Company used these proceeds to retire an aggregate of $311 million of long-term debt issues at maturity with annual interest rates ranging from 4.45% to 5.60%.

Revenues increased as a result of warmer and drier than normal weather during the third quarter of 2020 across several of the Company’s subsidiaries, contributing a benefit of $0.07 per diluted share for 2020.

Revenues from the Company’s residential customers increased from many states experiencing work from home activities due to the COVID-19 pandemic, which were largely offset by decreased revenues from the Company’s commercial and industrial customers as a result of the COVID-19 pandemic.

Partially offsetting these increases were estimated impacts from the COVID-19 pandemic on HOS from increased claims that likely have resulted from more work from home activity.

During the fourth quarter of 2019, the Company recognized a loss of $0.19 per diluted share, relating to the sale of its Keystone operations.

Additionally, during the first quarter of 2019, the Company recorded a benefit of $0.01 per diluted share from the reduction of the liability related to the Freedom Industries chemical spill settlement in West Virginia.

The Company also expects to continue to grow the Market-Based Businesses, which leverages its core water and wastewater competencies.

On November 20, 2019, the Company and the Company’s New York subsidiary entered into a Stock Purchase Agreement with Liberty, pursuant to which Liberty will purchase all of the capital stock of the New York subsidiary for an aggregate purchase price of approximately $608 million in cash, subject to adjustment as provided in the Stock Purchase Agreement.

*Market-Based Businesses Growth*

MSG was awarded the contract for ownership, operation and maintenance of the water and wastewater systems at Joint Base Lewis-McChord in Washington state, effective September 24, 2020.

Joint Base Lewis-McChord is comprised of Fort Lewis and McChord Air Force Base.

The joint base has a population of approximately 115,000, comprised of 40,000 active personnel, 60,000 family members and 15,000 civilian and contract employees.

The total contract award includes estimated revenues of approximately $771 million over a 50-year period, subject to an annual economic price adjustment.

Looking forward, the Company expects to invest between $10.3 billion to $10.5 billion from 2021 to 2025, and between $22 billion to $25 billion from 2021 to 2030, including $1.9 billion in 2021.

| Indiana (b) | | | 13 | | | | | | 4 | | | | | | — | | |

| California (c) | | | 5 | | | | | | 4 | | | | | | 10 | | |

| Virginia (d) | | | (1) | | | | | | — | | | | | | — | | |

| New York (e) | | | — | | | | | | 4 | | | | | | 5 | | |

(a)The $39 million base rate increase was effective on November 1, 2020, which is net of excess accumulated deferred income taxes (“EADIT”) of $15 million being returned to customers.

The $39 million rate increase was further reduced by a bill credit, for a 10-month period beginning November 1, 2020 for both the protected and unprotected catch up period EADIT of $32.5 million.

The $40 million rate increase was effective on June 15, 2018.

As part of the resolution of the general rate case in 2018, the Company’s New Jersey subsidiary’s customers received refunds for the amount of provisional rates implemented as of June 15, 2018 that exceeded the final rate increase plus interest.

(b)The Company’s Indiana subsidiary received an order approving a joint settlement agreement with all major parties with respect to its general rate case filing, authorizing annualized incremental revenues of $4 million in the first rate year, effective July 1, 2019, and $13 million in the second rate year, effective May 1, 2020.

(c)The Company’s California subsidiary received approval for the third year (2020) step increase associated with its most recent general rate case authorization, effective January 1, 2020.

In 2019, the step increase was effective May 11, 2019.

On December 13, 2018, a settlement in this subsidiary’s general rate case filing was approved, authorizing rates effective January 1, 2018.

(d)The Company’s Virginia subsidiary received an order approving increased water revenues by $1 million, inclusive of Water & Wastewater Infrastructure Service Charge (“WWISC”) revenues of $1 million, and decreased wastewater revenue by $1 million, for a net zero award including WWISC, or an overall decrease of $1 million excluding WWISC.

Unprotected EADIT is being returned to customers over eight years, and base rates include a reduction of $1 million for EADIT.

(e)The Company’s New York subsidiary implemented its third step increase associated with its most recent general rate case authorization, effective April 1, 2019.

Due in part to the COVID-19 pandemic, the NYSPSC approved, through a series of orders, the Company’s New York subsidiary’s request to postpone the previously approved step increase, originally scheduled to go into effect April 1, 2020 until May 1, 2021.

The orders provided a make whole provision to recover the delayed revenues with no earnings impact.

The Company also has the ability to enter into financial derivative instruments, which could include instruments such as, but not limited to, interest rate swaps, forward starting [removed: swaps, swaptions] [added: swaps] and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure.

As of December 31, [removed: 2020,] [added: 2021,] a hypothetical increase of interest rates by 1% associated with the Company’s short-term borrowings would result in a [removed: $6] [added: $8] million increase in short-term interest expense.

A holding company originally incorporated in Delaware in 1936, the Company employs approximately [removed: 7,000] [added: 6,400] professionals who provide drinking water, wastewater and other related services to over [removed: 15] [added: 14] million people in [removed: 46] [added: 24] states.

Throughout this [added: Annual Report on] Form 10-K, unless the context otherwise requires, references to “we,” “us,” “our,” the “Company,” and “American Water” mean American Water Works Company, Inc. and its subsidiaries, taken together as a whole.

The Company’s utilities operate in [removed: over] [added: approximately] 1,700 communities in [removed: 16] [added: 14] states in the United States, with [removed: 3.5] [added: 3.4] million active customers in its water and wastewater networks.

Operating revenues for the Regulated Businesses were [removed: $3,255] [added: $3,384] million for [removed: 2020, $3,094] [added: 2021, $3,255] million for [removed: 2019] [added: 2020] and [removed: $2,984] [added: $3,094] million for [removed: 2018,] [added: 2019,] accounting for 86%, 86% and [removed: 87%,] [added: 86%,] respectively, of the Company’s total operating revenues for the same periods.

Presented in the table below is a geographic summary of the Regulated Businesses’ operating revenues and the number of customers the Company serves, by type of service, for and as of the year ended December 31, [removed: 2020:][added: 2021:]

(b)The Company’s “Top [removed: Seven] [added: Five] States” are determined based upon operating revenues.

[removed: (c)Includes] [added: (d)Includes] the Company’s utility operations in the following states: Georgia, Hawaii, [added: Indiana,] Iowa, Kentucky, Maryland, Michigan, [removed: New York, Tennessee] [added: Tennessee, Virginia] and [added: West] Virginia and other revenue attributable collectively to the Regulated Businesses.

The following chart depicts the allocation of the Company’s Regulated Businesses’ operating revenue of [removed: $3,255] [added: $3,384] million by type, including a breakout of the total water services revenues by class of customer, for the year ended December 31, [removed: 2020:][added: 2021:]

[removed: ][added: ]

Presented in the table below is the number of water and wastewater customers the Company served by class as of December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] which represents approximately [removed: 15] [added: 14] million people served as of December 31, [removed: 2020:][added: 2021:]

| | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | [removed: 2018] [added: 2019] | | | | | | | | |

| Residential | | | [removed: 2,948] [added: 2,972] | | | | | | [removed: 236] [added: 245] | | | | | | [removed: 2,914] [added: 2,948] | | | | | | [removed: 215] [added: 236] | | | | | | [removed: 2,892] [added: 2,914] | | | | | | [removed: 188] [added: 215] | | |

| Commercial | | | 225 | | | | | | 15 | | | | | | [removed: 222] [added: 225] | | | | | | [removed: 13] [added: 15] | | | | | | 222 | | | | | | [removed: 11] [added: 13] | | |

| Fire service | | | [removed: 50] [added: 52] | | | | | | — | | | | | | [removed: 49] [added: 50] | | | | | | — | | | | | | [removed: 48] [added: 49] | | | | | | — | | |

| Public and other (a) | | | [removed: 17] [added: 16] | | | | | | 1 | | | | | | [removed: 16] [added: 17] | | | | | | 1 | | | | | | 16 | | | | | | 1 | | |

| Total | | | [removed: 3,244] [added: 3,269] | | | | | | [removed: 252] [added: 261] | | | | | | [removed: 3,205] [added: 3,244] | | | | | | [removed: 229] [added: 252] | | | | | | [removed: 3,182] [added: 3,205] | | | | | | [removed: 200] [added: 229] | | |

The Company plans to invest between [removed: $22] [added: $28] billion and [removed: $25] [added: $32] billion over the next 10 [removed: years, including acquisitions,] [added: years] for capital [removed: improvements] [added: improvements, including acquisitions,] to its Regulated Businesses’ water and wastewater infrastructure, largely for pipe replacement and upgrading aging water and wastewater treatment facilities.

The Company has proactively improved its pipe renewal rate from a 250-year replacement cycle in 2009 to an expected 110-year replacement cycle by [removed: 2025,] [added: 2026,] which it anticipates will enable the Company to replace nearly 2,200 miles of mains and collection pipes between [removed: 2021] [added: 2022] and [removed: 2025.][added: 2026.]

In addition, from [removed: 2021] [added: 2022] to [removed: 2025,] [added: 2026,] the Company’s capital investment in treatment plants, storage tanks and other key, above-ground facilities is expected to increase, further addressing infrastructure renewal, resiliency, water quality, operational efficiency, technology and innovation, and emerging regulatory compliance needs.

| Infrastructure replacement surcharge mechanisms | | | | | | Allows rates to change periodically, outside a general rate case proceeding, to reflect recovery of capital investments made to replace infrastructure necessary to sustain safe and reliable services for the Company’s customers. These mechanisms typically involve periodic filings and reviews to ensure transparency. | | | | | | IA, IL, IN, KY, MO, NJ, [removed: NY,] PA, TN, VA, WV | | |

| Future test year | | | | | | A “test year” is a period used for setting rates, and a future test year describes the first 12 months that new rates are proposed to be effective. The use of a future test year allows current or projected revenues, expenses and capital investments to be collected on a more timely basis. | | | | | | CA, HI, IA, IL, IN, KY, [removed: NY,] PA, TN, VA | | |

| Utility plant recovery mechanisms | | | | | | Allows recovery of the full return on utility plant costs during the construction period, instead of capitalizing an allowance for funds used during construction (“AFUDC”). In addition, some states allow the utility to seek pre-approval of certain capital projects and associated costs. In this pre-approval process, the PUC may assess the prudency of such projects. | | | | | | CA, IL, KY, [removed: NY,] PA, TN, VA | | |

| Expense mechanisms | | | | | | Allows changes in certain operating expenses, which may fluctuate based on conditions beyond the utility’s control, to be recovered outside of a general rate case proceeding or deferred until the next general rate case proceeding. | | | | | | CA, IL, MD, MO, NJ, [removed: NY,] PA, TN, VA | | |

| Revenue stability mechanisms | | | | | | Adjusts rates periodically to ensure that a utility recovers the revenues authorized in its general rate case, regardless of sales volume, including recognition of declining sales resulting from reduced consumption, while providing an incentive for customers to use water more efficiently. | | | | | | CA, [removed: IL, NY] [added: IL] | | |

| Consolidated tariffs | | | | | | Use of a unified rate structure for water systems owned and operated by a single utility, which may or may not be physically interconnected. The consolidated tariff pricing structure may be used fully or partially in a state, and is generally used to moderate the price impact of periodic fluctuations in local costs, while lowering administrative costs for customers. Pennsylvania also permits a blending of water and wastewater revenue requirements. | | | | | | CA, IA, IL, IN, KY, MD, MO, NJ, [removed: NY,] PA, VA, WV | | |

A fundamental aspect of the Company’s growth strategy is to pursue acquisitions of water and/or wastewater systems in geographic proximity to areas where the Company operates its Regulated [removed: Businesses.][added: Businesses, see Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.]

On [removed: November 20, 2019,] [added: January 1, 2022,] the Company [removed: and] [added: completed] the [removed: Company’s] [added: sale of its] New York subsidiary [removed: entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Liberty Utilities Co. which it subsequently assigned] to [removed: its indirect, wholly owned subsidiary] Liberty Utilities (Eastern Water Holdings) Corp. (“Liberty”), [removed: pursuant to which] [added: an indirect, wholly owned subsidiary of Algonquin Power & Utilities Corp. Under the terms of the Stock Purchase Agreement, dated November 20, 2019, as amended, by and among the Company, the Company’s New York subsidiary and] Liberty [removed: will purchase] [added: (the “Stock Purchase Agreement”), Liberty purchased from the Company] all of the capital stock of the [added: Company’s] New York subsidiary [removed: (the “Stock Purchase”)] for [removed: an aggregate] [added: a] purchase price of [removed: approximately] $608 million in [removed: cash, subject to adjustment as provided in the Stock Purchase Agreement.][added: cash.]

The Company’s regulated New York operations [removed: have] [added: had] approximately [removed: 125,000] [added: 127,000] customers in the State of New York.

This law imposes requirements in areas such as [removed: cybersecurity,] asset management, water quality reporting, remediation of notices of violation, and hydrant and valve maintenance.

The Company’s regulated subsidiaries in California, Illinois, Indiana, Iowa, [added: Kentucky,] Maryland, Missouri, New Jersey, [removed: Pennsylvania] [added: Pennsylvania, Tennessee, Virginia] and [added: West] Virginia have access to [removed: fair market value] [added: utility valuation] legislation [added: and regulation] for private sector investment in public sector water and wastewater systems.

Overall, the Company believes that consolidated tariffs bring cost-effective, [removed: high quality] [added: high-quality] services to a larger number of customers.

[removed: Twelve] [added: Eleven] of the Company’s regulated jurisdictions currently have some form of consolidated tariff pricing, including California, Illinois, Indiana, Iowa, Kentucky, Maryland, Missouri, New Jersey, [removed: New York,] Pennsylvania, Virginia and West Virginia.

In December 2020, Congress [removed: passed] [added: passed,] and the President signed into [removed: law] [added: law,] a $900 billion COVID-19 relief and $1.4 trillion U.S. government appropriations package for 2021, which included $638 million for a low-income water assistance program and $2.8 billion for capitalization grants under the Clean Water and Drinking Water State Revolving Funds.

When pursuing acquisitions, the Company’s largest investor-owned competitors, based on a comparison of operating revenues and population served, include Essential Utilities, [removed: Inc. (formerly known as Aqua America, Inc.),] [added: Inc.,] Suez North America, American States Water Company and California Water Service Group.

[removed: The] [added: On February 26, 2021, the] MPWMD [removed: will be required to file] [added: filed] an application with the Local Agency Formation Commission of Monterey County (“LAFCO”) seeking approval to become a retail water provider and annex approximately [removed: 56] [added: 58] parcels of land into the MPWMD’s boundaries.

Also, five municipalities in the Chicago, Illinois area (approximately 30,300 customers in total) formed a water agency and filed an eminent domain lawsuit against the [removed: Company’s Illinois subsidiary] [added: Company] in January 2013, seeking to condemn the water pipeline that serves those five municipalities.

Presented in the chart below are the Company’s sources of water supply as of December 31, [removed: 2020:][added: 2021:]

[removed: ][added: ]

Presented in the table below are the percentages of water supply by source type for the Company’s Top [removed: Seven] [added: Five] States for the year ended December 31, [removed: 2020:][added: 2021:]

[removed: Three] [added: Two] of the Company’s jurisdictions, [removed: California, Illinois] [added: California] and [removed: New York,] [added: Illinois,] have adopted revenue stability mechanisms which permit the Company to collect state PUC-authorized revenue for a given period which is not tied to the volume of water sold during that period, thereby lessening the impact of weather variability.

On December 9, 2021 (the “Closing Date”), the Company sold all of the equity interests of the HOS subsidiaries.

See Item 1—Business—Market-Based Businesses—Sale of Homeowner Services Group below and Note 6—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional information.

On January 1, 2022, the Company completed the sale of its New York subsidiary, see Item 1—Business—Regulated Businesses—Sale of New York American Water Company, Inc. below and Note 6—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional information.

The assets and related liabilities of the New York subsidiary were classified as held for sale on the Consolidated Balance Sheets as of December 31, 2021 and 2020.

| New Jersey | | | $ | 778 | | | | | $ | 48 | | | | | $ | 826 | | | | | 24.4 | | % | | | | 660 | | | | | | 55 | | | | | | 715 | | | | | | 20.3 | | % |

| Pennsylvania | | | 688 | | | | | | 82 | | | | | | 770 | | | | | | 22.8 | | % | | | | 677 | | | | | | 82 | | | | | | 759 | | | | | | 21.5 | | % |

| Missouri | | | 337 | | | | | | 12 | | | | | | 349 | | | | | | 10.3 | | % | | | | 474 | | | | | | 17 | | | | | | 491 | | | | | | 13.9 | | % |

| Illinois | | | 303 | | | | | | 37 | | | | | | 340 | | | | | | 10.0 | | % | | | | 295 | | | | | | 69 | | | | | | 364 | | | | | | 10.3 | | % |

| California | | | 265 | | | | | | 3 | | | | | | 268 | | | | | | 7.9 | | % | | | | 187 | | | | | | 3 | | | | | | 190 | | | | | | 5.4 | | % |

| Total—Top Five States (b) | | | 2,371 | | | | | | 182 | | | | | | 2,553 | | | | | | 75.4 | | % | | | | 2,293 | | | | | | 226 | | | | | | 2,519 | | | | | | 71.4 | | % |

| New York (c) | | | 127 | | | | | | — | | | | | | 127 | | | | | | 3.8 | | % | | | | 127 | | | | | | — | | | | | | 127 | | | | | | 3.6 | | % |

| Other (d) | | | 678 | | | | | | 26 | | | | | | 704 | | | | | | 20.8 | | % | | | | 849 | | | | | | 35 | | | | | | 884 | | | | | | 25.0 | | % |

| Total Regulated Businesses | | | $ | 3,176 | | | | | $ | 208 | | | | | $ | 3,384 | | | | | 100.0 | | % | | | | 3,269 | | | | | | 261 | | | | | | 3,530 | | | | | | 100.0 | | % |

(c)The Company completed the sale of its New York subsidiary on January 1, 2022.

The Company completed the sale of its Michigan subsidiary on February 4, 2022.

The benefit of investing in resiliency projects was seen firsthand in the aftermath of Tropical Depression Ida, when the Company’s New Jersey subsidiary reported that all its operating areas successfully withstood widespread flooding and drinking water quality was not impacted in any of its service areas.

Specifically, the New Jersey subsidiary’s Raritan-Millstone Water Treatment Plant, which was fortified with a $37 million flood protection project in 2018, withstood a record flood and continued to provide potable water supply for approximately 1 million people in parts of seven counties in central New Jersey.

The sale was approved by the New York State Department of Public Service on December 16, 2021.

See Note 6—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional information.

On November 15, 2021, the Infrastructure Investment and Jobs Act (the “IIJA”) was signed into law and provides for up to $55 billion to aid in improving the country’s ailing water infrastructure, including $23.4 billion for drinking water and wastewater, $15 billion for lead service line replacement (through the drinking water state revolving fund), and $10 billion for the treatment of per- and polyfluoroalkyl substances (“PFAS”) and other contaminants of emerging concern.

The bill also includes a low-income assistance program, which provides eligible low-income customers who receive their water from public and private entities to be eligible to participate in the program.

Enhanced WQAA legislation includes additional enforcement requirements for disclosure of results, requires the sale of systems for prolonged violations and imposes new cyber security requirements and asset management plans.

The new amendments, which provide for both civil and criminal penalties for falsification of documents, were signed by the Governor with an effective date of November 8, 2021.

In 2018, Indiana passed a law to set minimum operational expectations for all water and wastewater utilities in the state, including municipal and investor-owned utilities.

The law requires water and wastewater utilities to conduct rate analyses, develop capital asset management plans and conduct cybersecurity and water loss audits.

It also requires water and wastewater utilities to participate in regional discussions and planning to assess opportunities for the more efficient use of water and wastewater utility assets and infrastructure.

Water and wastewater utilities that fail to comply with the requirements of the law may be ineligible for grants and loans from the State Revolving Fund.

Under the law, all new municipal and investor-owned utilities are required to be regulated by the Indiana Utility Regulatory Commission for ten years from inception of operations.

In 2020, Missouri enacted the Water Safety and Security Act, which requires small and medium-sized water providers to create cybersecurity, valve inspection and hydrant inspection programs.

Upon request by the Missouri Department of Natural Resources, the water providers must certify compliance with all regulations regarding water quality sampling, testing and reporting, hydrant and valve testing and reporting and cybersecurity plans and procedures.

In 2021, the Tennessee Public Utilities Commission implemented acquisition valuation rules that create a mechanism to value water and wastewater assets based upon replacement cost new less depreciation.

A hearing on the matter was held on August 30, 2021, and on November 19, 2021, the court denied the petition.

On June 28, 2021, LAFCO’s commissioners voted to require a third-party independent financial study as to the feasibility of an acquisition by the MPWMD of the Monterey system assets.

On December 6, 2021, LAFCO’s commissioners denied the MPWMD’s application to become a retail water provider, determining that the MPWMD does not have the authority to proceed with a condemnation of the Monterey system assets.

On January 5, 2022, LAFCO’s commissioners confirmed the denial.

On January 31, 2022, the MPWMD filed an application for reconsideration of LAFCO’s confirmation of denial.

A hearing on the application has been set for February 28, 2022.

A valuation trial was originally scheduled for October 2021 but has been continued to June 2022.

| New Jersey | | | 74% | | | | | | 22% | | | | | | 4% | | |

| California | | | — | | | | | | 65% | | | | | | 35% | | |

| New Jersey | | | $ | 753 | | | | | $ | 43 | | | | | $ | 796 | | | | | 24.5 | | % | | | | 657 | | | | | | 55 | | | | | | 712 | | | | | | 20.4 | | % |

| Pennsylvania | | | 663 | | | | | | 70 | | | | | | 733 | | | | | | 22.5 | | % | | | | 673 | | | | | | 77 | | | | | | 750 | | | | | | 21.6 | | % |

| Missouri | | | 335 | | | | | | 11 | | | | | | 346 | | | | | | 10.6 | | % | | | | 472 | | | | | | 15 | | | | | | 487 | | | | | | 13.9 | | % |

| Illinois | | | 293 | | | | | | 32 | | | | | | 325 | | | | | | 10.0 | | % | | | | 292 | | | | | | 68 | | | | | | 360 | | | | | | 10.3 | | % |

| California | | | 247 | | | | | | 3 | | | | | | 250 | | | | | | 7.7 | | % | | | | 183 | | | | | | 3 | | | | | | 186 | | | | | | 5.3 | | % |

| Indiana | | | 234 | | | | | | 2 | | | | | | 236 | | | | | | 7.3 | | % | | | | 318 | | | | | | 2 | | | | | | 320 | | | | | | 9.2 | | % |

| West Virginia | | | 164 | | | | | | 1 | | | | | | 165 | | | | | | 5.1 | | % | | | | 168 | | | | | | 1 | | | | | | 169 | | | | | | 4.8 | | % |

| Total—Top Seven States (b) | | | 2,689 | | | | | | 162 | | | | | | 2,851 | | | | | | 87.7 | | % | | | | 2,763 | | | | | | 221 | | | | | | 2,984 | | | | | | 85.5 | | % |

| Other (c) | | | 381 | | | | | | 23 | | | | | | 404 | | | | | | 12.3 | | % | | | | 481 | | | | | | 31 | | | | | | 512 | | | | | | 14.5 | | % |

| Total Regulated Businesses | | | $ | 3,070 | | | | | $ | 185 | | | | | $ | 3,255 | | | | | 100.0 | | % | | | | 3,244 | | | | | | 252 | | | | | | 3,496 | | | | | | 100.0 | | % |

[Table](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7) [of](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7) [](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7)[Contents](#i6f3d4ccfe88f41a0a0429b7142f90e1c_7)

Recently completed projects include a $15 million emergency power generation system installation at New Jersey’s Raritan Millstone Water Treatment Plant which provides automated standby power in the event of a power failure, and $23 million and $27 million Water Treatment Plant Improvement projects to retire obsolete pumping and water treatment facilities located in 100-year floodplains in both Muncie and Richmond, Indiana, respectively.

Algonquin Power & Utilities Corp., Liberty’s ultimate parent company, executed and delivered an absolute and unconditional guaranty of the performance of the obligations of Liberty under the Stock Purchase Agreement.

The Stock Purchase is subject to various conditions, including obtaining approvals and satisfying or waiving other closing conditions.

The Stock Purchase Agreement has an initial termination date of June 30, 2021.

Either party may extend the agreement beyond June 30, 2021, and the Company intends to extend the agreement, if necessary, provided all of the conditions to closing have been or are capable of being met, other than obtaining regulatory approvals.

If not otherwise extended, the ultimate termination date is December 31, 2021.

Liberty may also terminate the Stock Purchase Agreement if any governmental authority initiates a condemnation or eminent domain proceeding against a majority of the consolidated properties of the New York subsidiary, taken as a whole.

In the fourth quarter of 2020, the Governor of New York proposed legislation that, among other things, requires the New York State Department of Public Service (“NYSDPS”) to study whether private water suppliers should be placed under municipal control.

On February 3, 2021, the Governor issued a press release announcing that he directed the NYSDPS Special Counsel to commence and lead a municipalization feasibility study to be completed by April 1, 2021.

Meanwhile, the Company’s New York subsidiary continues to work constructively with the NYSDPS and is taking the actions necessary to complete the Stock Purchase.

Subject to satisfying or waiving the various conditions to closing, and assuming no prior termination of the Stock Purchase Agreement by Liberty as described above, the Company remains confident that the Stock Purchase will be completed, though the date of the close of the transaction could be impacted by the timing of the work to be completed by the NYSDPS Special Counsel.

In an effort to strengthen accountability under the WQAA, the New Jersey Senate held three hearings on the WQAA during 2020.

The New Jersey Assembly has also heard legislation to strengthen the WQAA in one committee, and referral to the Assembly Appropriations Committee is pending.

In 2020, legislation in Indiana was passed that created an appraisal process to establish fair value for non-municipal utilities and a presumption that a purchase price not exceeding the appraised value is reasonable.

That legislation also requires that all new municipal water and wastewater systems are subject to the jurisdiction of the utility regulatory commission for ten years.

Separate legislation authorizes recovery for above ground infrastructure, without a full rate case, for service enhancements that are completed for health, safety or environmental concerns.

That same legislation also removed relocations completed for road construction from the distribution system improvement charge recovery caps.

In 2020, legislation in West Virginia was passed that allows for expanded asset valuation in connection with the acquisition of a utility or utility assets, combined water and wastewater revenue requirements and the expansion of permitted uses by municipalities of proceeds from the sale of a water or wastewater system.

The legislation also allows inclusion of contributed property in a system’s asset valuation and rate base recognition for the full purchase price approved by the Public Service Commission of West Virginia.

Approval by LAFCO is a precondition to the MPWMD’s ability to file an eminent domain proceeding against the Company’s California subsidiary to acquire the Monterey system assets.

If the MPWMD were to make a final determination that an acquisition of the Monterey system assets is feasible, it would then need to file a multi-year eminent domain proceeding against the Company’s California subsidiary.

In that proceeding, it would first need to establish its right to take the Monterey system assets.

If such right is established, the amount of just compensation to be paid to the California subsidiary for such assets would then need to be determined.

Although the date of the valuation trial is not currently scheduled, it is not likely to commence until the second quarter of 2021.

| New Jersey | | | 72% | | | | | | 24% | | | | | | 4% | | |

| California | | | — | | | | | | 62% | | | | | | 38% | | |

| Indiana | | | 44% | | | | | | 56% | | | | | | — | | |

| West Virginia | | | 100% | | | | | | — | | | | | | — | | |

The Company’s primary Market-Based Businesses include the following operating segments:

However, [removed: based on the matters discussed above and below in Item 3—Monterey Peninsula Water Supply Project,] there can be no assurance that the Water Supply Project in its current configuration will be completed on a timely basis, if ever.

While the Company cannot currently predict the likelihood or result of any adverse outcome associated with these matters, further attempts to comply with the 2009 Order and the 2016 [removed: Order, or] [added: Order in] the [removed: 2021 Deadline,] [added: future] may result in material additional costs and obligations to Cal Am, including fines and penalties against Cal Am in the event of noncompliance with the 2009 Order [removed: or] [added: and] the 2016 Order.

In September 2018, the CPUC unanimously approved another final decision finding that [removed: (i)] the Water Supply Project meets the CPUC’s requirements for a [removed: CPCN, (ii) the issuance of the final decision should not be delayed,] [added: CPCN] and [removed: (iii)] an additional procedural phase was not necessary to consider alternative projects.

Cal Am has incurred [removed: $154] [added: $186] million in aggregate costs as of December 31, [removed: 2020] [added: 2021] related to the Water Supply Project, which includes [removed: $36] [added: $47] million in AFUDC.

[removed: On] [added: In] July [removed: 2,] 2019, Cal Am notified the MPWMD and Monterey One Water (collectively, the “Agencies”) that an event of default occurred under the water purchase agreement for the GWR Project because the Agencies failed to deliver to Cal Am by July 1, 2019 advanced treated recycled water produced by the GWR Project.

[removed: Cal Am has elected not to exercise its right to terminate the water purchase agreement at this time, but in] [added: In] its notification to the Agencies, Cal Am expressly reserved its right to terminate the water purchase agreement until [removed: such time as] the Performance Start [removed: Date has occurred.][added: Date, which was September 1, 2020.]

[removed: After] [added: As of] June 30, 2021, Cal Am [removed: will determine] [added: determined that] the [removed: amount of advanced treated recycled water produced by] [added: Agencies met their performance obligations under] the [removed: GWR Project and delivered] [added: water purchase agreement with respect] to [removed: Cal Am during] the first fiscal year of the [removed: water purchase agreement, to determine the Agencies’ compliance with their performance obligations thereunder.][added: contract.]

[removed: On] [added: In] August [removed: 25,] 2020, the staff of the Coastal Commission released a report again recommending denial of Cal Am’s application for a coastal development permit.

[removed: On] [added: In] September [removed: 16,] 2020, Cal Am withdrew its original jurisdiction application to allow additional time to address the Coastal Commission staff’s environmental justice concerns.

Cal Am refiled the original jurisdiction application [removed: on] [added: in] November [removed: 6,] 2020.

[removed: On] [added: In] December [removed: 3,] 2020, the Coastal Commission sent to Cal Am a notice of incomplete application, identifying certain additional information needed to consider the application complete.

Because Cal Am may use the test slant well as one of the slant wells for the Water Supply Project, Cal Am sought and obtained from the Coastal Commission permit amendments to allow the test slant well to remain in place and be maintained until February [removed: 28, 2022.][added: 23, 2023.]

[removed: On] [added: In] May [removed: 8,] 2020, the City filed a [removed: lawsuit, which it amended on June 29, 2020 and October 15, 2020,] [added: lawsuit] in Monterey County Superior Court, naming Cal Am and CEMEX as defendants, and MCWRA and MCWD as real parties in interest.

The [removed: lawsuit] [added: lawsuit, as amended,] alleges a claim for breach of contract against CEMEX and seeks declaratory relief to void the permanent easement and prohibiting extraction of water by Cal Am’s slant wells at the CEMEX site in excess of 500 acre-feet per year and the export of such water outside the groundwater basin.

[removed: On] [added: In] November [removed: 17,] 2020, Cal Am, CEMEX and MCWRA filed demurrers, which were overruled by the court at a hearing held on February 9, 2021.

[removed: On] [added: In] August [removed: 4,] 2020, MCWD filed a cross-complaint in the May 8, 2020 lawsuit against Cal Am, CEMEX and MCWRA, alleging claims for specific performance of certain provisions of the 1996 annexation agreement related to the property owned by CEMEX on which intake wells for the Water Supply Project will be located, [added: as well as claims of] water rights, [removed: nuisance,] [added: nuisance and] unreasonable water use, and [added: seeking additional] declaratory relief.

[removed: On] [added: Following various rulings on demurrers filed by Cal Am, CEMEX and MCWRA, on] February 23, 2021, the court sustained, without leave to amend, the demurrer to MCWD’s nuisance claim and overruled the remainder of the demurrers.

SDWR accepted [removed: the] [added: Monterey] County’s filing on December 18, 2019, and now lists [removed: the] [added: Monterey] County as the exclusive GSA for the site.

On December 30, 2019, the City filed a lawsuit in Monterey County Superior Court challenging [removed: the] [added: Monterey] County’s filing, and SDWR’s acceptance of the filing, as the exclusive GSA for the CEMEX site.

The City has named [removed: the] [added: Monterey] County and its Board of Supervisors, [removed: the County] [added: its] GSA, and SDWR and its director as defendants, and the SVBGSA and its Board of Directors as real parties.

The City seeks to invalidate [removed: the] [added: Monterey] County’s filing, as well as injunctive relief to preserve the City’s status as a GSA for the site.

Due to the overlap of issues in the City’s lawsuit with those in the validation action, the parties stipulated to a stay of the validation action pending determination of the claims in the City’s [removed: action.][added: action, which was approved by the court in December 2020.]

This [removed: petition] [added: complaint] remains pending.

The system was reconfigured to maintain service to all but approximately 3,000 customers while a final repair was [added: being] completed safely on June 30, 2015.

[removed: On] [added: In] February [removed: 4,] 2020, the *Jeffries* plaintiffs filed a motion seeking class certification on the issues of breach of contract and negligence, and to determine the applicability of punitive damages and a multiplier for those damages if imposed.

[removed: On] [added: In] July [removed: 14,] 2020, the Circuit Court entered an order granting the *Jeffries* plaintiffs’ motion for certification of a class regarding certain liability issues but denying certification of a class to determine a punitive damages multiplier.

[removed: On] [added: In] August [removed: 31,] 2020, WVAWC filed a Petition for Writ of Prohibition in the Supreme Court of Appeals of West Virginia seeking to vacate or remand the Circuit Court’s order certifying the issues class.

On January 28, 2021, the Supreme Court of Appeals [removed: granted a motion by the *Jeffries* plaintiffs to remand] [added: remanded] the case back to the Circuit Court for further consideration in light of a [removed: recent Supreme Court of Appeals] decision issued in another case relating to the class certification issues [removed: raised.][added: raised on appeal.]

In the complaint as [added: originally] filed, the Tennessee Plaintiffs were seeking an award of unspecified alleged damages for wage losses, business and economic losses, out-of-pocket expenses, loss of use and enjoyment of property and annoyance and inconvenience, as well as punitive damages, attorneys’ fees and pre- and post-judgment interest.

[removed: The collective impact of the] [added: In] September [removed: 2020] [added: 2020, the] court [removed: orders was that] [added: dismissed] all of the Tennessee Plaintiffs’ claims in [removed: this complaint were dismissed, other than] [added: their complaint, except for] the breach of contract claims against [removed: TAWC.][added: TAWC, which remain pending.]

[removed: On] [added: In] October [removed: 16,] 2020, TAWC answered the complaint, and the parties [removed: are commencing with] [added: have been engaging in] discovery.

Set forth below is information related to the Company’s material pending legal proceedings as of February 16, 2022, other than ordinary routine litigation incidental to the business, required to be disclosed in this Annual Report on Form 10-K.

The information below should be read together with Note 17—Commitments and Contingencies in the Notes to the Consolidated Financial Statements.

In accordance with the SEC’s disclosure rules, the Company has elected to disclose environmental proceedings involving the Company and a governmental authority if the amount of potential monetary sanctions, exclusive of interest and costs, that the Company reasonably believes will result from such proceeding is $1 million or more.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

Beginning in January 2022, Cal Am expects to be able to comply with the diversion reduction requirements contained in the 2016 Order, but continued compliance with the diversion reduction requirements for 2023 and future years will depend on successful development of alternate water supply sources sufficient to meet customer demand.

The 2009 Order and the 2016 Order remain in effect until Cal Am certifies to the SWRCB, and the SWRCB concurs, that Cal Am has obtained a permanent supply of water to substitute for past unauthorized Carmel River diversions.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

In September 2021, Cal Am, Monterey One Water and the MPWMD reached an agreement on Cal Am’s purchase of additional water from the expansion to the GWR Project, which is not expected to produce additional water until 2024 at the earliest.

The amended and restated water purchase agreement for the GWR Project is subject to review and approval of the CPUC, and on November 29, 2021, Cal Am filed an application with the CPUC seeking review and approval of the amended and restated water purchase agreement.

Cal Am is also requesting rate base treatment of the additional capital investment for certain Cal Am facilities required to maximize the water supply from the expansion to the GWR Project and a related Aquifer Storage and Recovery Project, totaling approximately $81 million.

This amount is in addition to, and consistent in regulatory treatment with, the prior $50 million of recovery for facilities associated with the original water purchase agreement, which was approved by the CPUC in its 2016 final decision.

In March 2021, Cal Am provided responses to the Coastal Commission’s notice of incomplete application.

On June 18, 2021, the Coastal Commission responded, acknowledging the responses and requesting certain additional information before the application could be considered complete.

Cal Am responded with the requested additional information on January 11, 2022, and on February 8, 2022, the Coastal Commission requested additional information.

The original jurisdiction application remains pending.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

On May 25, 2021, Cal Am filed a notice of appeal as to the Monterey County Superior Court’s January 21, 2021 decision, seeking to challenge the court’s decision on Monterey County’s statement of overriding considerations.

Monterey County filed a notice of appeal as to the same issue on May 26, 2021.

On June 22, 2021, MCWD filed cross-appeals on its claims that had been denied by the court.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

On October 7, 2021, the court granted a motion filed by Cal Am related to MCWD’s cross-complaint, which motion requested a referral of certain issues related to MCWD’s water rights and unreasonable use claims to the SWRCB for its expert advisory opinion.

*Challenges Related to Compliance with California’s Sustainable Groundwater Management Act*

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

Monterey County filed cross-claims against the City and SDWR.

After a hearing, on August 24, 2021, the court denied the claims brought by the City and granted Monterey County’s cross-claims, finding that the City’s GSA notice was untimely, the Monterey County GSA was the exclusive GSA for the CEMEX site, and the SVBGSA’s GSP was properly adopted for the entire 180/400 subbasin, including the CEMEX site.

On November 15, 2021, the City appealed this decision, and on December 13, 2021, Monterey County appealed the court’s decision as to the finding that the City’s action creating a GSA was not void.

On February 16, 2021, the City filed a separate but related *in rem* reverse validation complaint challenging the adoption by Monterey County of a GSP for the CEMEX site.

Currently, both validation actions remain stayed during the pendency of the City’s appeals.

A hearing on the matter was held on August 30, 2021, and on November 19, 2021, the court denied Cal Am’s petition.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

On July 16, 2021, oral argument was heard by the Circuit Court on the issue of addressing the Supreme Court of Appeals’ remand.

This matter remains pending.

The court has entered an agreed scheduling order, which sets a hearing in October 2022 to address the question of class certification.

Other Matters

On April 2, 2021, American Water Resources, LLC (“AWR”), which, prior to the Closing Date was one of the indirect, wholly owned subsidiaries comprising the Company’s former HOS operations, received a grand jury subpoena in connection with an investigation by the U.S. Attorney’s Office for the Eastern District of New York (the “EDNY”).

The subpoena seeks documents regarding AWR’s operations and its contractor network in the New York City metropolitan area.

In connection with the sale of the HOS operations to the Buyer (including all of the Company’s equity interests in AWR), the Company, AWR and the Buyer entered into a Common Interest and Cooperation Agreement (the “Cooperation Agreement”), dated as of the Closing Date, which facilitates a common defense for, and the sharing of information concerning, the EDNY investigation and any legal or regulatory inquiries or proceedings related to or resulting from it or the subject matter in the subpoena (collectively, the “Covered Matters”).

The Company, on behalf of AWR, is required to defend any Covered Matter, using commercially reasonable efforts to resolve it on a reasonably expedient basis.

Further, the Company is required to consult with the Buyer in specified circumstances and obtain its prior written consent (which consent may not be unreasonably withheld, conditioned or delayed) before entering into any resolution of any Covered Matter that imposes non-monetary provisions or undertakings or any other terms for which there will be no indemnification under the Cooperation Agreement.

In addition, for the period from the Closing Date to March 9, 2025, the Company is required to indemnify the Buyer for any monetary losses or out-of-pocket damages (as described in the Cooperation Agreement) incurred by the Buyer or certain of the HOS subsidiaries to the extent directly arising in connection with, or directly resulting from, any Covered Matter.

The 2016 Order provides that if the CPUC authorizes Cal Am to acquire more than 1,000 acre-feet per year of water from a source other than the Water Supply Project, proponents of the alternative water source could submit revised milestones to the SWRCB for consideration.

See Monterey Peninsula Water Supply Project below.

In May 2018, certain parties to the Water Supply Project proceeding submitted a petition to the SWRCB to add parallel milestones to the 2009 Order for 2019, 2020, and 2021, based on the proposed expansion of the Pure Water Monterey project, another groundwater replenishment project under construction on the Monterey peninsula.

Petitioners claim that compliance with the alternate milestones would still provide for cessation of Cal Am’s unauthorized diversions from the Carmel River by 2021.

A preliminary report on feasibility concluded that the expanded Pure Water Monterey project could provide an additional 2,250 acre-feet of water per year.

Cal Am believes that (i) the petition is premature, (ii) the expanded Pure Water Monterey project is not yet a sufficiently certain or reliable water supply and, even if construction is successfully completed, would provide an insufficient quantity of water to allow full compliance with the 2009 Order, and (iii) the imposition of parallel milestones would distract from completion of the Water Supply Project.

In December 2019, the SWRCB dismissed the petition without prejudice.

The 2016 Order imposes yearly milestones related to construction of the Water Supply Project’s desalination plant facilities.

If any milestone is missed, the SWRCB may impose reductions of up to 1,000 acre-feet per year in the amount of water Cal Am is able to divert from the Carmel River.

If a milestone is missed for reasons that are beyond Cal Am’s control, the SWRCB may waive the diversion reduction.

On October 21, 2020, Cal Am reported to the SWRCB that, due to circumstances beyond its control, it will be unable to meet the 2020 milestones requiring intake well drilling and plant construction due to (i) delays by the California Coastal Commission (the “Coastal Commission”) in considering Cal Am’s application for a permit for the desalination facility’s intake wells, and (ii) a stay issued by the Monterey Superior Court on physical construction of the desalination plant in pending litigation over the plant’s construction permit.

Nevertheless, Cal Am reported that even with a 1,000 acre-foot reduction in Carmel River water supplies, it believed that customer demand could be met without additional rationing in the 2020-2021 water year.

On November 17, 2020, the SWRCB provided its view to Cal Am that the milestone reductions were imposed to ensure a staggered approach to ending unauthorized diversions, and that regardless of fault a 1,000 acre-foot reduction was an appropriate and intended consequence of missing the milestone.

Due to the delay in the approval schedule, Cal Am currently does not believe that it will be able to fully comply with the diversion reduction requirements and other remaining requirements under the 2009 Order and the 2016 Order, including the 2021 Deadline.

Under the water purchase agreement, upon the occurrence of this event of default, Cal Am had the right to terminate the water purchase agreement immediately.

Cal Am has elected not to exercise its right to terminate the water purchase agreement at this time, but in its notification to the Agencies, Cal Am expressly reserved its right to terminate the water purchase agreement until such time as the Agencies commence their required delivery of water from the GWR Project.

On July 16, 2019, the MPWMD and Monterey One Water responded to Cal Am’s event of default notice and estimated that water delivery would begin by mid-October 2019.

On December 12, 2019, Cal Am sent a letter to the Agencies requesting a status update with respect to the event of default.

On January 2, 2020, Cal Am notified the Agencies that a second event of default occurred under the water purchase agreement because the Agencies failed to achieve the Performance Start Date (the date upon which the MPWMD’s performance obligations under the water purchase agreement were to commence) by January 1, 2020.

On July 30, 2020, the Agencies advised Cal Am that the Performance Start Date under the water purchase agreement for the GWR Project is September 1, 2020.

On April 17, 2019, Water Ratepayers Association of the Monterey Peninsula (“WRAMP”), a citizens’ advocacy group, filed an amended complaint in Monterey County Superior Court asserting a “qui tam” claim under the California False Claims Act on behalf of itself and the State of California against Cal Am and certain environmental consultants who worked on the CPUC’s environmental analysis of the MPWSP.

The State Attorney General declined to proceed with this action after it was originally filed in 2016.

On July 10, 2019, defendants filed a joint demurrer challenging the legal sufficiency of the allegations of the amended complaint.

At an August 27, 2019 hearing on the demurrer, the court dismissed the petition without leave to amend.

On October 17, 2019, WRAMP filed motions seeking clarification and a reconsideration of the court’s ruling.

A hearing on these motions was set for December 3, 2019, but on November 26, 2019, WRAMP abandoned its motions and instead filed an appeal of the court’s dismissal.

On November 17, 2020, WRAMP dismissed its appeal in exchange for a waiver of costs.

Cal Am is preparing a response to the Coastal Commission’s notice.

The City has requested a meeting with CEMEX as part of a mandatory dispute resolution process under the annexation agreement prior to filing a lawsuit.

On September 9, 2020, Cal Am filed a demurrer and motion to strike challenging the claims asserted by MCWD.

On October 14, 2020, the court sustained, with leave to amend, the demurrers as to the claims for specific performance, enjoinment of invasion of water rights, nuisance and unreasonable water use, and the court overruled the demurrers as to the claim for declaratory relief.

MCWD filed a first amended complaint on November 13, 2020.

On December 7, 2020, Cal Am, CEMEX and MCWRA filed demurrers to the amended claims.

A hearing has been scheduled for May 17, 2021.

On December 21, 2020, the court stayed the validation action.

At the request of the parties, on September 10, 2020, the Circuit Court ordered the stay of all matters in the class proceeding pending consideration of this petition.

On December 3, 2020, the Supreme Court of Appeals issued an order to show cause stating that there are sufficient grounds for oral argument to consider prohibiting the class certification order.

On November 22, 2019, the Tennessee-American Water Defendants filed a motion to dismiss the complaint for failure to state a claim upon which relief may be granted, and, with respect to the Company, a motion to dismiss for lack of personal jurisdiction.

After oral argument on the motion to dismiss, on September 18, 2020, the court (i) granted the motion to dismiss the Tennessee Plaintiffs’ negligence claim against all Tennessee-American Water Defendants, (ii) denied the motion to dismiss the breach of contract claim against TAWC, (iii) held in abeyance the motion to dismiss the breach of contract claims against the Company and Service Company pending a further hearing and (iv) held in abeyance the Company’s motion to dismiss the complaint for lack of personal jurisdiction.

On September 24, 2020, at the request of the Tennessee Plaintiffs, the court dismissed without prejudice all claims in the *Bruce* complaint against the Company and Service Company.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

Common Stock, $0.01 par [removed: value—$20,390,800,000] [added: value—$24,667,400,000] as of June 30, [removed: 2020] [added: 2021] (solely for purposes of calculating this aggregate market value, American Water has defined its affiliates to include (i) those persons who were, as of June 30, [removed: 2020,] [added: 2021,] its executive officers, directors or known beneficial owners of more than 10% of its common stock, and (ii) such other persons who were deemed, as of June 30, [removed: 2020,] [added: 2021,] to be controlled by, or under common control with, American Water or any of the persons described in clause (i) above).

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: Common Stock, $0.01 par value per [removed: share—181,439,255] [added: share—181,724,991] shares as of February [removed: 19, 2021.][added: 10, 2022.]

Portions of the American Water Works Company, Inc. definitive proxy statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2020] [added: 2021] are incorporated by reference into Part III of this report.

| [Forward-Looking [removed: Statements](#i6f3d4ccfe88f41a0a0429b7142f90e1c_13)] [added: Statements](#ifb4765332bfb410ba6ce53d196f7d99d_13)] | | | | | | [removed: [1](#i6f3d4ccfe88f41a0a0429b7142f90e1c_13)] [added: [1](#ifb4765332bfb410ba6ce53d196f7d99d_13)] | | |

| Item 1. | | | [removed: [Business](#i6f3d4ccfe88f41a0a0429b7142f90e1c_19)] [added: [Business](#ifb4765332bfb410ba6ce53d196f7d99d_19)] | | | [removed: [4](#i6f3d4ccfe88f41a0a0429b7142f90e1c_19)] [added: [4](#ifb4765332bfb410ba6ce53d196f7d99d_19)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i6f3d4ccfe88f41a0a0429b7142f90e1c_49)] [added: Factors](#ifb4765332bfb410ba6ce53d196f7d99d_46)] | | | [removed: [25](#i6f3d4ccfe88f41a0a0429b7142f90e1c_49)] [added: [26](#ifb4765332bfb410ba6ce53d196f7d99d_46)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i6f3d4ccfe88f41a0a0429b7142f90e1c_52)] [added: Comments](#ifb4765332bfb410ba6ce53d196f7d99d_49)] | | | [removed: [40](#i6f3d4ccfe88f41a0a0429b7142f90e1c_52)] [added: [41](#ifb4765332bfb410ba6ce53d196f7d99d_49)] | | |

| Item 2. | | | [removed: [Properties](#i6f3d4ccfe88f41a0a0429b7142f90e1c_55)] [added: [Properties](#ifb4765332bfb410ba6ce53d196f7d99d_52)] | | | [removed: [40](#i6f3d4ccfe88f41a0a0429b7142f90e1c_55)] [added: [41](#ifb4765332bfb410ba6ce53d196f7d99d_52)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i6f3d4ccfe88f41a0a0429b7142f90e1c_58)] [added: Proceedings](#ifb4765332bfb410ba6ce53d196f7d99d_55)] | | | [removed: [40](#i6f3d4ccfe88f41a0a0429b7142f90e1c_58)] [added: [41](#ifb4765332bfb410ba6ce53d196f7d99d_55)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i6f3d4ccfe88f41a0a0429b7142f90e1c_61)] [added: Disclosures](#ifb4765332bfb410ba6ce53d196f7d99d_58)] | | | [removed: [47](#i6f3d4ccfe88f41a0a0429b7142f90e1c_61)] [added: [48](#ifb4765332bfb410ba6ce53d196f7d99d_58)] | | |

| Item 5. | | | [Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i6f3d4ccfe88f41a0a0429b7142f90e1c_67)] [added: Securities](#ifb4765332bfb410ba6ce53d196f7d99d_64)] | | | [removed: [48](#i6f3d4ccfe88f41a0a0429b7142f90e1c_67)] [added: [49](#ifb4765332bfb410ba6ce53d196f7d99d_64)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i6f3d4ccfe88f41a0a0429b7142f90e1c_73)] [added: Operations](#ifb4765332bfb410ba6ce53d196f7d99d_70)] | | | [removed: [49](#i6f3d4ccfe88f41a0a0429b7142f90e1c_73)] [added: [50](#ifb4765332bfb410ba6ce53d196f7d99d_70)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i6f3d4ccfe88f41a0a0429b7142f90e1c_121)] [added: Risk](#ifb4765332bfb410ba6ce53d196f7d99d_103)] | | | [removed: [75](#i6f3d4ccfe88f41a0a0429b7142f90e1c_121)] [added: [78](#ifb4765332bfb410ba6ce53d196f7d99d_103)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i6f3d4ccfe88f41a0a0429b7142f90e1c_124)] [added: Data](#ifb4765332bfb410ba6ce53d196f7d99d_106)] | | | [removed: [77](#i6f3d4ccfe88f41a0a0429b7142f90e1c_124)] [added: [79](#ifb4765332bfb410ba6ce53d196f7d99d_106)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i6f3d4ccfe88f41a0a0429b7142f90e1c_259)] [added: Disclosure](#ifb4765332bfb410ba6ce53d196f7d99d_199)] | | | [removed: [130](#i6f3d4ccfe88f41a0a0429b7142f90e1c_259)] [added: [137](#ifb4765332bfb410ba6ce53d196f7d99d_199)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i6f3d4ccfe88f41a0a0429b7142f90e1c_262)] [added: Procedures](#ifb4765332bfb410ba6ce53d196f7d99d_202)] | | | [removed: [130](#i6f3d4ccfe88f41a0a0429b7142f90e1c_262)] [added: [137](#ifb4765332bfb410ba6ce53d196f7d99d_202)] | | |

| Item 9B. | | | [Other [removed: Information](#i6f3d4ccfe88f41a0a0429b7142f90e1c_265)] [added: Information](#ifb4765332bfb410ba6ce53d196f7d99d_205)] | | | [removed: [130](#i6f3d4ccfe88f41a0a0429b7142f90e1c_265)] [added: [137](#ifb4765332bfb410ba6ce53d196f7d99d_205)] | | |

| Item 10. | | | [Directors, Executive Officers of the Registrant and Corporate [removed: Governance](#i6f3d4ccfe88f41a0a0429b7142f90e1c_271)] [added: Governance](#ifb4765332bfb410ba6ce53d196f7d99d_211)] | | | [removed: [131](#i6f3d4ccfe88f41a0a0429b7142f90e1c_271)] [added: [139](#ifb4765332bfb410ba6ce53d196f7d99d_211)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i6f3d4ccfe88f41a0a0429b7142f90e1c_274)] [added: Compensation](#ifb4765332bfb410ba6ce53d196f7d99d_214)] | | | [removed: [131](#i6f3d4ccfe88f41a0a0429b7142f90e1c_274)] [added: [139](#ifb4765332bfb410ba6ce53d196f7d99d_214)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i6f3d4ccfe88f41a0a0429b7142f90e1c_277)] [added: Matters](#ifb4765332bfb410ba6ce53d196f7d99d_217)] | | | [removed: [131](#i6f3d4ccfe88f41a0a0429b7142f90e1c_277)] [added: [139](#ifb4765332bfb410ba6ce53d196f7d99d_217)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#i6f3d4ccfe88f41a0a0429b7142f90e1c_280)] [added: Independence](#ifb4765332bfb410ba6ce53d196f7d99d_220)] | | | [removed: [131](#i6f3d4ccfe88f41a0a0429b7142f90e1c_280)] [added: [139](#ifb4765332bfb410ba6ce53d196f7d99d_220)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i6f3d4ccfe88f41a0a0429b7142f90e1c_283)] [added: Services](#ifb4765332bfb410ba6ce53d196f7d99d_223)] | | | [removed: [131](#i6f3d4ccfe88f41a0a0429b7142f90e1c_283)] [added: [139](#ifb4765332bfb410ba6ce53d196f7d99d_223)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i6f3d4ccfe88f41a0a0429b7142f90e1c_289)] [added: Schedules](#ifb4765332bfb410ba6ce53d196f7d99d_229)] | | | [removed: [132](#i6f3d4ccfe88f41a0a0429b7142f90e1c_289)] [added: [140](#ifb4765332bfb410ba6ce53d196f7d99d_229)] | | |

Statements included in Item 1—Business, Item 1A—Risk Factors, and Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in other sections of this [added: Annual Report on] Form 10-K, or incorporated by reference [removed: into this Form 10-K,] [added: therein,] are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995.

Forward-looking statements may relate to, among other things: the Company’s future financial performance, liquidity and cash flows; [added: the timing and amount of] rate and revenue adjustments, including through general rate case filings, filings for infrastructure surcharges and other governmental agency authorizations and [added: proceedings, and] filings to address regulatory lag; [added: the Company’s] growth and portfolio optimization strategies, including the timing and outcome of pending or future acquisition [removed: activity, the completion of the announced sale of the Company’s New York subsidiary and the amount of proceeds anticipated to be received therefrom;] [added: activity;] the ability of the Company’s California subsidiary to obtain adequate alternative water supplies in lieu of diversions from the Carmel River; the amount and allocation of projected capital expenditures and related funding requirements; the Company’s ability to repay or refinance debt; the [added: future impacts of increased or increasing financing costs, inflation and interest rates; the Company’s] ability to execute its current and long-term business, operational and capital expenditures strategies; [removed: its] [added: the Company’s] ability to finance current operations, capital expenditures and growth initiatives by accessing the debt and equity capital markets; the outcome and impact on the Company of governmental and regulatory proceedings and related potential fines, penalties and other sanctions; the ability to [added: meet or exceed the Company’s stated environmental and sustainability goals, including its greenhouse gas emission reduction, water delivery efficiency and water system resiliency goals; the ability to] complete, and the timing and efficacy of, the design, development, implementation and improvement of technology and other strategic initiatives; the impacts to the Company of the [removed: current pandemic health event resulting from the novel coronavirus (“COVID-19”);] [added: ongoing COVID-19 pandemic;] the ability to capitalize on existing or future utility privatization opportunities; trends in the [added: water and wastewater] industries in which the Company operates, including macro trends with respect to the Company’s efforts related to customer, technology and work execution; regulatory, legislative, tax policy or legal developments; and impacts that future significant tax legislation may have on the Company and on its business, results of operations, cash flows and liquidity.

- the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates and regulatory responses to the [added: ongoing] COVID-19 pandemic;

- changes in laws, governmental regulations and policies, including with respect to environmental, health and safety, [removed: consumer and] data [added: and consumer] privacy, [added: security and protection,] water quality and water quality accountability, contaminants of emerging concern, public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections and changes in federal, state and local executive administrations;

- the risks associated with the Company’s aging infrastructure, and its ability to appropriately improve the resiliency of or maintain and replace, current or future infrastructure and systems, including its technology and other assets, and manage [added: the expansion of its businesses;]

- the Company’s ability to obtain adequate and cost-effective supplies of [added: pipe,] equipment (including personal protective equipment), chemicals, electricity, fuel, water and other raw [removed: materials;][added: materials, and to address or mitigate supply chain constraints that may result in delays or shortages in, as well as increased costs of, supplies, products and materials that are critical to or used in the Company’s business operations;]

- the Company’s ability to successfully meet [added: its operational] growth [removed: projections for the Regulated Businesses and the Market-Based Businesses (each as defined in this Form 10-K),] [added: projections,] either individually or in the aggregate, and capitalize on growth opportunities, including, among other things, with respect to:

- changes in general economic, political, business and financial market conditions, including without limitation conditions and collateral consequences associated with the [removed: current pandemic health event resulting from COVID-19;][added: COVID-19 pandemic;]

- fluctuations in [added: inflation or] interest rates;

- [added: the] ability to comply with affirmative or negative covenants in the current or future indebtedness of the Company or any of its subsidiaries, or the issuance of new or modified credit ratings or outlooks by credit rating agencies with respect to the Company or any of its subsidiaries (or any current or future indebtedness thereof), which could increase financing costs or funding requirements and affect the Company’s or its subsidiaries’ ability to issue, repay or redeem debt, pay dividends or make distributions;

- changes in federal or state general, income and other tax laws, including (i) future significant tax legislation, (ii) [removed: further rules, regulations, interpretations and guidance by] the [removed: U.S. Department of the Treasury and state or local taxing authorities (collectively, the “Related Interpretations”) related to the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), (iii) the] availability of, or the Company’s compliance with, the terms of applicable tax credits and tax abatement programs, and [removed: (iv)] [added: (iii)] the Company’s ability to utilize its [removed: U.S. federal and] state income tax net operating loss (“NOL”) carryforwards;

These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors included in Item 1A—Risk Factors and other statements contained in this [added: Annual Report on] Form 10-K, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements.

Any forward-looking statements the Company makes shall speak only as of the date this [added: Annual Report on] Form 10-K was filed with the U.S. Securities and Exchange Commission (“SEC”).

| | | | [Part I](#ifb4765332bfb410ba6ce53d196f7d99d_16) | | | | | |

| | | | [Part II](#ifb4765332bfb410ba6ce53d196f7d99d_61) | | | | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#ifb4765332bfb410ba6ce53d196f7d99d_2051) | | | [138](#ifb4765332bfb410ba6ce53d196f7d99d_2051) | | |

| | | | [Part III](#ifb4765332bfb410ba6ce53d196f7d99d_208) | | | | | |

| | | | [Part IV](#ifb4765332bfb410ba6ce53d196f7d99d_226) | | | | | |

| Item 16. | | | [Form 10-K Summary](#ifb4765332bfb410ba6ce53d196f7d99d_2057) | | | [140](#ifb4765332bfb410ba6ce53d196f7d99d_2057) | | |

| [Exhibit Index](#ifb4765332bfb410ba6ce53d196f7d99d_232) | | | | | | [140](#ifb4765332bfb410ba6ce53d196f7d99d_232) | | |

| [Signatures](#ifb4765332bfb410ba6ce53d196f7d99d_235) | | | | | | [145](#ifb4765332bfb410ba6ce53d196f7d99d_235) | | |

- the Company’s ability to collect, distribute, use, secure and store consumer data in compliance with current or future governmental laws, regulations and policies with respect to data and consumer privacy, security and protection;

- the Company’s Military Services Group (“MSG”) entering into new military installation contracts, price redeterminations, and other agreements and contracts, with the U.S. government; and

- risks and uncertainties following the completion of the sale of the Company’s Homeowner Services Group (“HOS”) and its New York subsidiary, including:

- the Company’s ability to receive any contingent consideration provided for in the HOS sale, as well as amounts due, payable and owing to the Company from time to time under the seller note when due; and

- the ability of the Company to redeploy successfully and timely the net proceeds of these transactions into the Company’s Regulated Businesses;

| | | | [Part I](#i6f3d4ccfe88f41a0a0429b7142f90e1c_16) | | | | | |

| | | | [Part II](#i6f3d4ccfe88f41a0a0429b7142f90e1c_64) | | | | | |

| Item 6. | | | [Selected Financial Data](#i6f3d4ccfe88f41a0a0429b7142f90e1c_70) | | | [48](#i6f3d4ccfe88f41a0a0429b7142f90e1c_70) | | |

| | | | [Part III](#i6f3d4ccfe88f41a0a0429b7142f90e1c_268) | | | | | |

| | | | [Part IV](#i6f3d4ccfe88f41a0a0429b7142f90e1c_286) | | | | | |

| [Exhibit Index](#i6f3d4ccfe88f41a0a0429b7142f90e1c_292) | | | | | | [132](#i6f3d4ccfe88f41a0a0429b7142f90e1c_292) | | |

| [Signatures](#i6f3d4ccfe88f41a0a0429b7142f90e1c_295) | | | | | | [137](#i6f3d4ccfe88f41a0a0429b7142f90e1c_295) | | |

the expansion of its businesses;

- entering into contracts and other agreements with, or otherwise obtaining, new customers or partnerships in the Market-Based Businesses; and

- [removed: 79] [added: 80] surface water treatment plants;

- [removed: 530] [added: 480] groundwater treatment plants;

- [removed: 150] [added: 160] wastewater treatment plants;

- [removed: 53,200] [added: 52,500] miles of transmission, distribution and collection mains and pipes;

- [removed: 1,600] [added: 1,700] water and wastewater pumping stations;

- [removed: 75] [added: 76] dams.

Approximately [removed: 52%] [added: 51%] of all properties that the Company owns are located in New Jersey and Pennsylvania.

[Table](#ifb4765332bfb410ba6ce53d196f7d99d_7) [of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)

Since April 23, 2008, the Company’s common stock has traded on the New York Stock Exchange (“NYSE”) under the symbol “AWK.” As of February [removed: 19, 2021,] [added: 10, 2022,] there were [removed: 181,439,255] [added: 181,724,991] shares of common stock outstanding held by approximately [removed: 2,427] [added: 2,333] record holders.

From April 1, 2015, the date repurchases under the anti-dilutive stock repurchase program commenced, through December 31, [removed: 2020,] [added: 2021,] the Company repurchased an aggregate of 4,860,000 shares of its common stock under the program, leaving an aggregate of 5,140,000 shares available for repurchase under this program.

There were no repurchases of common stock in [removed: 2020.][added: 2021.]

| [Report of Independent Registered Public Accounting [removed: Firm](#i6f3d4ccfe88f41a0a0429b7142f90e1c_127)] [added: Firm](#ifb4765332bfb410ba6ce53d196f7d99d_109) [(PCAOB I](#ifb4765332bfb410ba6ce53d196f7d99d_109)[D](#ifb4765332bfb410ba6ce53d196f7d99d_109) 238[)](#ifb4765332bfb410ba6ce53d196f7d99d_109)] | | | [removed: [78](#i6f3d4ccfe88f41a0a0429b7142f90e1c_127)] [added: [80](#ifb4765332bfb410ba6ce53d196f7d99d_109)] | | |

| [Consolidated Statements of Operations for the years ended December 31, [removed: 2020, 2019 and 2018](#i6f3d4ccfe88f41a0a0429b7142f90e1c_139)] [added: 202](#ifb4765332bfb410ba6ce53d196f7d99d_118)[1](#ifb4765332bfb410ba6ce53d196f7d99d_118)[, 20](#ifb4765332bfb410ba6ce53d196f7d99d_118)[20](#ifb4765332bfb410ba6ce53d196f7d99d_118) [and 20](#ifb4765332bfb410ba6ce53d196f7d99d_118)[19](#ifb4765332bfb410ba6ce53d196f7d99d_118)] | | | [removed: [82](#i6f3d4ccfe88f41a0a0429b7142f90e1c_139)] [added: [84](#ifb4765332bfb410ba6ce53d196f7d99d_118)] | | |

| [Consolidated Statements of Comprehensive Income for the years ended December [removed: 31, 2020, 2019 and 2018](#i6f3d4ccfe88f41a0a0429b7142f90e1c_142)] [added: 31,](#ifb4765332bfb410ba6ce53d196f7d99d_121) [202](#ifb4765332bfb410ba6ce53d196f7d99d_121)[1](#ifb4765332bfb410ba6ce53d196f7d99d_121)[, 20](#ifb4765332bfb410ba6ce53d196f7d99d_121)[20](#ifb4765332bfb410ba6ce53d196f7d99d_121) [and 201](#ifb4765332bfb410ba6ce53d196f7d99d_121)[9](#ifb4765332bfb410ba6ce53d196f7d99d_121)] | | | [removed: [83](#i6f3d4ccfe88f41a0a0429b7142f90e1c_142)] [added: [85](#ifb4765332bfb410ba6ce53d196f7d99d_121)] | | |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019 and 2018](#i6f3d4ccfe88f41a0a0429b7142f90e1c_148)] [added: 202](#ifb4765332bfb410ba6ce53d196f7d99d_124)[1](#ifb4765332bfb410ba6ce53d196f7d99d_124)[, 20](#ifb4765332bfb410ba6ce53d196f7d99d_124)[20](#ifb4765332bfb410ba6ce53d196f7d99d_124) [and 201](#ifb4765332bfb410ba6ce53d196f7d99d_124)[9](#ifb4765332bfb410ba6ce53d196f7d99d_124)] | | | [removed: [84](#i6f3d4ccfe88f41a0a0429b7142f90e1c_148)] [added: [86](#ifb4765332bfb410ba6ce53d196f7d99d_124)] | | |

| [Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, [removed: 2020, 2019 and 2018](#i6f3d4ccfe88f41a0a0429b7142f90e1c_154)] [added: 202](#ifb4765332bfb410ba6ce53d196f7d99d_127)[1](#ifb4765332bfb410ba6ce53d196f7d99d_127)[, 20](#ifb4765332bfb410ba6ce53d196f7d99d_127)[20](#ifb4765332bfb410ba6ce53d196f7d99d_127) [and 201](#ifb4765332bfb410ba6ce53d196f7d99d_127)[9](#ifb4765332bfb410ba6ce53d196f7d99d_127)] | | | [removed: [85](#i6f3d4ccfe88f41a0a0429b7142f90e1c_154)] [added: [87](#ifb4765332bfb410ba6ce53d196f7d99d_127)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i6f3d4ccfe88f41a0a0429b7142f90e1c_160)] [added: Statements](#ifb4765332bfb410ba6ce53d196f7d99d_130)] | | | [removed: [86](#i6f3d4ccfe88f41a0a0429b7142f90e1c_160)] [added: [88](#ifb4765332bfb410ba6ce53d196f7d99d_130)] | | |

We have audited the accompanying consolidated balance sheets of American Water Works Company, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] in conformity with accounting principles generally accepted in the United States of America.

[removed: Also,] [added: Also] in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

As described in Notes 2 and 4 to the consolidated financial statements, the Company’s consolidated regulatory assets and liabilities balances were [removed: $1,127] [added: $1,067] million and [removed: $1,770] [added: $1,608] million, respectively, as of December 31, [removed: 2020.][added: 2021.]

As disclosed by management, for each regulatory jurisdiction where the Company conducts business, [removed: management] [added: the Company] assesses, at the end of each reporting period, whether the regulatory assets continue to meet the criteria for probable future recovery and regulatory liabilities continue to meet the criteria for probable future settlement.

| | | | December 31, [removed: 2020] [added: 2021] | | | | | | December 31, [removed: 2019] [added: 2020] | | |

| Property, plant and equipment | | | $ | [removed: 25,614] [added: 27,413] | | | | | $ | [removed: 23,941] [added: 25,614] | |

| Accumulated depreciation | | | [removed: (5,904)] [added: (6,329)] | | | | | | [removed: (5,709)] [added: (5,904)] | | |

| Property, plant and equipment, net | | | [removed: 19,710] [added: 21,084] | | | | | | [removed: 18,232] [added: 19,710] | | |

| Cash and cash equivalents | | | [removed: 547] [added: 116] | | | | | | [removed: 60] [added: 547] | | |

| Restricted funds | | | [removed: 29] [added: 20] | | | | | | [removed: 31] [added: 29] | | |

| Accounts receivable, net of allowance for uncollectible accounts of [removed: $60] [added: $75] and [removed: $41,] [added: $60,] respectively | | | [removed: 321] [added: 271] | | | | | | [removed: 294] [added: 321] | | |

| Unbilled revenues | | | [removed: 206] [added: 248] | | | | | | [removed: 172] [added: 206] | | |

| Materials and supplies | | | [removed: 47] [added: 57] | | | | | | [removed: 44] [added: 47] | | |

| Assets held for sale | | | [removed: 629] [added: 683] | | | | | | [removed: 566] [added: 629] | | |

| Other | | | [removed: 127] [added: 159] | | | | | | [removed: 118] [added: 127] | | |

| Total current assets | | | [removed: 1,906] [added: 1,554] | | | | | | [removed: 1,285] [added: 1,906] | | |

| Regulatory assets | | | [removed: 1,127] [added: 1,051] | | | | | | [removed: 1,128] [added: 1,127] | | |

| Operating lease right-of-use assets | | | [removed: 95] [added: 92] | | | | | | [removed: 103] [added: 95] | | |

| Goodwill | | | [removed: 1,504] [added: 1,139] | | | | | | [removed: 1,501] [added: 1,504] | | |

| Postretirement benefit assets | | | [removed: 173] [added: 193] | | | | | | [removed: 159] [added: 173] | | |

| Intangible assets | | | [removed: 55] [added: —] | | | | | | [removed: 67] [added: 55] | | |

| Other | | | [removed: 196] [added: 242] | | | | | | [removed: 207] [added: 196] | | |

| Total regulatory and other long-term assets | | | [removed: 3,150] [added: 3,437] | | | | | | [removed: 3,165] [added: 3,150] | | |

| Total assets | | | $ | [removed: 24,766] [added: 26,075] | | | | | $ | [removed: 22,682] [added: 24,766] | |

| Common stock ($0.01 par value; 500,000,000 shares authorized; [removed: 186,466,707] [added: 186,880,413] and [removed: 185,903,727] [added: 186,466,707] shares issued, respectively) | | | $ | 2 | | | | | $ | 2 | |

| Paid-in-capital | | | [removed: 6,747] [added: 6,781] | | | | | | [removed: 6,700] [added: 6,747] | | |

| Retained earnings [removed: (accumulated deficit)] | | | [removed: 102] [added: 925] | | | | | | [removed: (207)] [added: 102] | | |

| Accumulated other comprehensive loss | | | [removed: (49)] [added: (45)] | | | | | | [removed: (36)] [added: (49)] | | |

| Treasury stock, at cost [removed: (5,168,215] [added: (5,269,324] and [removed: 5,090,855] [added: 5,168,215] shares, respectively) | | | [removed: (348)] [added: (365)] | | | | | | [removed: (338)] [added: (348)] | | |

| Total common shareholders' equity | | | [removed: 6,454] [added: 7,298] | | | | | | [removed: 6,121] [added: 6,454] | | |

| Long-term debt | | | [removed: 9,329] [added: 10,341] | | | | | | [removed: 8,639] [added: 9,329] | | |

| Redeemable preferred stock at redemption value | | | [removed: 4] [added: 3] | | | | | | [removed: 5] [added: 4] | | |

| [Consolidated Balance Sheets as of December 31, 202](#ifb4765332bfb410ba6ce53d196f7d99d_115)[1](#ifb4765332bfb410ba6ce53d196f7d99d_115) [and 2](#ifb4765332bfb410ba6ce53d196f7d99d_115)[020](#ifb4765332bfb410ba6ce53d196f7d99d_115) | | | [82](#ifb4765332bfb410ba6ce53d196f7d99d_115) | | |

| Seller promissory note from the sale of the Homeowner Services Group | | | 720 | | | | | | — | | |

| Other | | | 180 | | | | | | 83 | | |

| Interest expense | | | (403) | | | | | | (397) | | | | | | (386) | | |

| Interest income | | | 4 | | | | | | 2 | | | | | | 4 | | |

| Gain or (loss) on sale of businesses | | | 747 | | | | | | — | | | | | | (44) | | |

| Depreciation and amortization | | | 636 | | | | | | 604 | | | | | | 582 | | |

| (Gain) or loss on sale of businesses | | | (747) | | | | | | — | | | | | | 34 | | |

| Seller promissory note from the sale of the Homeowner Services Group | | | $ | 720 | | | | | $ | — | | | | | $ | — | |

| Contingent cash payment from the sale of the Homeowner Services Group | | | $ | 75 | | | | | $ | — | | | | | $ | — | |

| Balance as of December 31, 2021 | | | 186.9 | | | | | | $ | 2 | | | | | $ | 6,781 | | | | | $ | 925 | | | | | $ | (45) | | | | | (5.3) | | | | | | $ | (365) | | | | | $ | 7,298 | |

Seller Promissory Note

The Company’s seller promissory note is accounted for under ASC 310, Receivables, and is classified as held for investment and accounted for at amortized cost at the present value of consideration received for the sale of its HOS business.

Interest income from the seller promissory note is accrued based on the principal amount outstanding and earned over the contractual life of the loan.

All of the Company’s finite-lived intangible assets were sold as part of the HOS sale transaction.

| Disclosures by Business Entities about Government Assistance | | | | | | The amendments in this update requires additional disclosures regarding government grants and contributions. These disclosures require information on the following three items about these government transactions to be provided: information on the nature of transactions and related accounting policy used to account for transactions, the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line, and significant terms and conditions of the transactions, including commitments and contingencies | | | | | | January 1, 2022 | | | | | | Either prospective or retrospective | | | | | | The Company is evaluating any impact on its Consolidated Financial Statements. | | |

| Accounting for Contract Asset and Contract Liabilities from Contracts with Customers | | | | | | The guidance requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606 as if it had originated the contracts. | | | | | | January 1, 2023; early adoption permitted | | | | | | Prospective | | | | | | The Company is evaluating any impact on its Consolidated Financial Statements, as well as the timing of adoption. | | |

The Company reclassified $44 million relating to loss on the sale of Keystone Clearwater Solutions, LLC in 2019 from operating expenses to other income (expenses) included in Gain or (loss) on sale of businesses on the Consolidated Statements of Operations.

American Water continues to monitor the COVID-19 pandemic and has experienced financial impacts since the start of the pandemic resulting from lower revenues from the suspension of late fees and foregone reconnect fees in certain states, certain incremental O&M expenses, an increase in uncollectible accounts expense and additional debt costs.

The Company’s Pennsylvania subsidiary filed for a request with the Pennsylvania Public Utility Commission (the “PaPUC”) to defer as a regulatory asset all identified COVID-19 financial impacts.

On September 15, 2021, the PaPUC issued an order approving the Company’s request to defer, with carrying costs, incremental uncollectible expense and other incremental costs net of savings attributed to the COVID-19 pandemic.

The PaPUC order denied the request to include lost revenues attributed to the waiver of late fees and reconnect fees and expenses associated with additional interest costs.

Additionally, the PaPUC order approved the request to allow for the continuation of the deferral of financial impacts, rejecting proposals from the intervening parties to define an end date to the deferral in 2021.

As a result of the order discussed above, the Company recorded a net $7 million reduction to its regulatory assets and corresponding impacts to revenue, interest expense and uncollectible expense during the third quarter of 2021.

The Company continues to evaluate options within its next base rate case to address these denied items and the resulting financial impact.

On July 28, 2021, the Company’s Tennessee subsidiary filed a stipulation and settlement agreement with the Consumer Advocate Unit in the Financial Division of the Office of the Tennessee Attorney General, which reflected agreement on the deferral of COVID-19-related financial impacts through April 30, 2021.

On August 9, 2021, the Tennessee Public Utility Commission denied the stipulation and settlement agreement and moved to address the Company’s Tennessee subsidiary’s petition to defer the COVID-19 financial impacts in a future hearing.

On August 26, 2021, the Company’s Tennessee subsidiary filed a motion to withdraw its pending petition, preserving its right to seek recovery of the COVID-19 financial impacts in a future proceeding.

As of February 16, 2022, one state, New Jersey, continues moratoria until March 15, 2022, on the suspension of service disconnections due to non-payment.

| Iowa (effective October 11, 2021) | | | $ | 1 | | | | | $ | — | | | | | $ | — | |

| California (effective January 1, 2021, January 1, 2020 and May 11, 2019) | | | 22 | | | | | | 5 | | | | | | 4 | | |

| Indiana (effective May 1, 2020 and July 1, 2019) | | | — | | | | | | 13 | | | | | | 4 | | |

(a)Excludes authorized increases of $7 million and $4 million in 2021 and 2019, respectively, for the Company’s New York subsidiary, which was sold on January 1, 2022.

On November 18, 2021, the California Public Utilities Commission (the “CPUC”) unanimously approved a final decision in the test year 2021 general rate case filed by the Company’s California subsidiary, which is retroactive to January 1, 2021.

The Company’s California subsidiary received authorization for additional annualized water and wastewater revenues of $22 million, excluding agreed to reductions for EADIT as a result of the Tax Cuts and Jobs Act of 2017 (the “TCJA”).

The EADIT reduction in revenues is $4 million and is offset by a like reduction in income tax expense.

On January 18, 2022, the Company’s California subsidiary filed for approval of $13 million in 2022 escalation increases, excluding $4 million of reductions related to the TCJA.

This filing, which is retroactive to January 1, 2022, is subject to CPUC approval with a 45-day review period.

On June 28, 2021, an order was issued authorizing an increase of $1 million in the general rate case filed by the Company’s Iowa subsidiary in 2020.

The Company’s Iowa subsidiary filed tariffs consistent with the order on September 23, 2021.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| [Consolidated Balance Sheets as of December 31, 2020 and 2019](#i6f3d4ccfe88f41a0a0429b7142f90e1c_133) | | | [80](#i6f3d4ccfe88f41a0a0429b7142f90e1c_133) | | |

*Change in Accounting Principle*

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

| February 24, 2021 | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Loss (gain) on asset dispositions and purchases | | | — | | | | | | 34 | | | | | | (20) | | |

| Impairment charge | | | — | | | | | | — | | | | | | 57 | | |

| Interest, net | | | (395) | | | | | | (382) | | | | | | (350) | | |

| Net loss attributable to noncontrolling interest | | | — | | | | | | — | | | | | | (2) | | |

| Pension reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act | | | — | | | | | | — | | | | | | (22) | | |

| Cash flow hedges reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act | | | — | | | | | | — | | | | | | 2 | | |

| Impact of Freedom Industries settlement activities | | | — | | | | | | (4) | | | | | | (40) | | |

| Issuance of common stock | | | — | | | | | | — | | | | | | 183 | | |

| Balance as of December 31, 2017 | | | 182.5 | | | | | | $ | 2 | | | | | $ | 6,432 | | | | | $ | (723) | | | | | $ | (79) | | | | | (4.1) | | | | | | $ | (247) | | | | | $ | 5,385 | |

| Cumulative effect of change in accounting principle | | | — | | | | | | — | | | | | | — | | | | | | 20 | | | | | | — | | | | | | — | | | | | | — | | | | | | 20 | | |

| Repurchases of common stock | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (0.5) | | | | | | (45) | | | | | | (45) | | |

Presented in the table below is a reconciliation of the cash and cash equivalents and restricted funds amounts as presented on the Consolidated Balance Sheets to the sum of such amounts presented on the Consolidated Statements of Cash Flows for the years ended December 31:

| Cash and cash equivalents | | | $ | 547 | | | | | $ | 60 | |

| Cash and cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows | | | $ | 576 | | | | | $ | 91 | |

On January 1, 2019, the Company adopted Accounting Standards Update 2016-02, *Leases (Topic 842)*, and all related amendments (collectively, the “Standard”).

The Company implemented the guidance in the Standard using the modified retrospective approach and applied the optional transition method, which allowed entities to apply the new Standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

Under this approach, prior periods have not been restated and continue to be reported under the accounting standards in effect for those periods.

The Standard includes practical expedients, which relate to the identification and classification of leases that commenced before the adoption date, initial direct costs for leases that commenced before the adoption date, the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset and the ability to carry forward accounting treatment for existing land easements.

Adoption of the Standard resulted in the recognition of operating lease right-of-use (“ROU”) assets and operating lease liabilities as of January 1, 2019 of approximately $117 million and $115 million, respectively.

The difference between the ROU assets and operating lease liabilities was recorded as an adjustment to retained earnings.

The Standard did not materially impact the Company’s consolidated results of operations and had no impact on cash flows.

On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, *Revenue From Contracts With Customers,* and all related amendments (collectively, “ASC 606”)*,* using the modified retrospective approach, applied to contracts which were not completed as of January 1, 2018.

| Measurement of Credit Losses on Financial Instruments | | | | | | Updated the accounting guidance on reporting credit losses for financial assets held at amortized cost basis and available-for-sale debt securities. Under this guidance, expected credit losses are required to be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. Also, this guidance requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. | | | | | | January 1, 2020 | | | | | | Modified retrospective | | | | | | The standard did not have a material impact on the Consolidated Financial Statements. | | |

| Changes to the Disclosure Requirements for Fair Value Measurement | | | | | | Updated the disclosure requirements for fair value measurement. The guidance removes the requirements to disclose transfers between Level 1 and Level 2 measurements, the timing of transfers between levels, and the valuation processes for Level 3 measurements. Disclosure of transfers into and out of Level 3 measurements will be required. The guidance adds disclosure requirements for the change in unrealized gains and losses in other comprehensive income for recurring Level 3 measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 measurements. | | | | | | January 1, 2020 | | | | | | Prospective for added disclosures and for the narrative description of measurement uncertainty; retrospective for all other amendments. | | | | | | The standard did not have a material impact on the Consolidated Financial Statements. | | |

American Water has been monitoring the global outbreak of the COVID-19 pandemic.

To date, the Company has experienced COVID-19 financial impacts, including an increase in uncollectible accounts expense, additional debt costs, and certain incremental O&M expenses.

The Company has also experienced decreased revenues as a result of the suspension of late fees and foregone reconnect fees.

In addition to approving deferred accounting, to date, two regulatory jurisdictions have also approved cost recovery mechanisms for specified COVID-19 financial impacts.

| Proceedings pending | | | | | | Pending proceedings considering deferred accounting authorization for the future recovery of COVID-19 financial impacts. | | | | | | NY, TN | | |

As of February 24, 2021, six states have ordered active moratoria on the suspension of service disconnections due to non-payment.

| Indiana (b) | | | 13 | | | | | | 4 | | | | | | — | | |

| California (c) | | | 5 | | | | | | 4 | | | | | | 10 | | |

The Company, under the supervision and with the participation of its management, including the [added: Company’s President,] Chief Executive Officer and [removed: the] Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act as of the end of the period covered by this report.

Based on that evaluation, the [added: Company’s President,] Chief Executive Officer and Chief Financial Officer [removed: have] [added: has] concluded that, as of December 31, [removed: 2020,] [added: 2021,] the Company’s disclosure controls and procedures were effective at a reasonable level of assurance.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the [added: Company’s President,] Chief Executive Officer and [removed: the] Chief Financial Officer, to allow timely decisions regarding required disclosure.

The Company’s internal control over financial reporting is a process designed by or under the supervision of the [added: Company’s President,] Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company’s management, including the [added: Company’s President,] Chief Executive Officer and [removed: the] Chief Financial Officer, assessed the effectiveness of its internal control over financial reporting, as of December 31, [removed: 2020,] [added: 2021,] using the criteria described in *Internal Control—Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the Company’s evaluation under the framework in *Internal Control—Integrated Framework (2013)*, its management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing in Item 8—Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

PART III

Not applicable.

PART III

The information required by this item and not [removed: given] [added: set forth] below or in Item 1—Business—Executive Officers of this [added: Annual Report on] Form 10-K, is incorporated by reference from the Company’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, to be filed with the SEC within 120 days following the end of the fiscal year covered by this report, under the captions entitled “Board of Directors and Corporate Governance,” “Proposal 1—Election of Directors” and “Certain Beneficial Ownership [removed: Matters—Section] [added: Matters—Delinquent Section] 16(a) [removed: Delinquent] Reports.”

Information required by this item is incorporated by reference in the Company’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, under the captions entitled “Proposal 1—Election of Directors—Director Compensation Table,” “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.”

Information required by this item setting forth the security ownership of certain beneficial owners and management is incorporated by reference in the Company’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, under the captions entitled “Certain Beneficial Ownership Matters—Security Ownership of Management,” “Certain Beneficial Ownership Matters—Security Ownership of Certain Beneficial Owners” and “Equity Compensation Plan Information.”

Information required by this item is incorporated by reference in the Company’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, under the caption entitled “Board of Directors and Corporate Governance—Board Review of Related Person Transactions” and “Proposal 1—Election of Directors—Director Independence.”

Information required by this item is incorporated by reference in the Company’s Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, under the caption entitled “Proposal 3—Ratification of Appointment of Independent Registered Public Accounting Firm—Fees Paid to Independent Registered Public Accounting Firm” and “Proposal 3—Ratification of Appointment of Independent Registered Public Accounting Firm—Pre-Approval of Services Provided by Independent Registered Public Accounting Firm.”

(a) The following documents have been filed as a part of this [added: Annual Report on] Form 10-K:

EXHIBIT INDEX

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Exhibit Number | | | | | | Exhibit Description | | |

| 2.1# | | | | | | [Stock Purchase Agreement, dated November 20, 2019, by and among American Water Works Company, Inc., New York American Water Company, Inc. and Liberty Utilities Co. (incorporated by reference to Exhibit 2.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 20, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519296612/d806306dex21.htm) | | |

| 3.1 | | | | | | [Restated Certificate of Incorporation of American Water Works Company, Inc. (incorporated by reference to Exhibit 3.1 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed November 6, 2008).](http://www.sec.gov/Archives/edgar/data/1410636/000119312508227647/dex31.htm) | | |

| 3.2 | | | | | | [Amended and Restated Bylaws of American Water Works Company, Inc. (incorporated by reference to Exhibit 3.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 10, 2020).](http://www.sec.gov/Archives/edgar/data/1410636/000141063620000153/exhibit31-amendedandre.htm) | | |

| 4.1 | | | | | | [Indenture, dated as of October 22, 2007, between American Water Capital Corp. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.4 to American Water Capital Corp.’s Registration Statement on Form S-4, File No. 333-148284, and American Water Works Company, Inc.’s Registration Statement on Form S-4, File No. 333-148284-01, filed December 21, 2007).](http://www.sec.gov/Archives/edgar/data/1410635/000119312507270490/dex44.htm) | | |

| 4.2 | | | | | | [Indenture, dated as of December 4, 2009, between American Water Capital Corp. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 3, 2010).](http://www.sec.gov/Archives/edgar/data/1410636/000119312510273459/dex41.htm) | | |

| 4.3 | | | | | | [Officers’ Certificate, dated December 15, 2010, establishing the 6.00% Senior Monthly Notes due 2040 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 15, 2010).](http://www.sec.gov/Archives/edgar/data/1410636/000119312510280810/dex41.htm) | | |

| 4.4 | | | | | | [Officers’ Certificate, dated December 17, 2012, establishing the 4.300% Senior Notes due 2042 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 17, 2012).](http://www.sec.gov/Archives/edgar/data/1410636/000119312512505064/d455208dex41.htm) | | |

| 4.5 | | | | | | [Officers’ Certificate, dated November 20, 2013, establishing the 3.850% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 20, 2013).](http://www.sec.gov/Archives/edgar/data/1410636/000119312513448115/d629514dex41.htm) | | |

| 4.6 | | | | | | [Officers’ Certificate, dated August 14, 2014, establishing the 3.400% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 14, 2014).](http://www.sec.gov/Archives/edgar/data/1410636/000119312514309521/d773032dex41.htm) | | |

| 4.7 | | | | | | [Officers’ Certificate, dated August 14, 2014, providing for a further issuance of the 4.300% Senior Notes due 2042 (incorporated by reference to Exhibit 4.3 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 14, 2014).](http://www.sec.gov/Archives/edgar/data/1410636/000119312514309521/d773032dex43.htm) | | |

| 4.8 | | | | | | [Officers’ Certificate, dated August 13, 2015, establishing the 4.300% Senior Notes due 2045 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 13, 2015).](http://www.sec.gov/Archives/edgar/data/1410636/000119312515290164/d122389dex41.htm) | | |

| 4.9 | | | | | | [Officers’ Certificate, dated August 13, 2015, providing for a further issuance of the 3.400% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 13, 2015).](http://www.sec.gov/Archives/edgar/data/1410636/000119312515290164/d122389dex43.htm) | | |

| 4.10 | | | | | | [Officers’ Certificate, dated November 17, 2016, establishing the 3.000% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 17, 2016).](http://www.sec.gov/Archives/edgar/data/1410636/000156459016029433/awk-ex41_7.htm) | | |

| 4.11 | | | | | | [Officers’ Certificate, dated November 17, 2016, establishing the 4.000% Senior Notes due 2046 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 17, 2016).](http://www.sec.gov/Archives/edgar/data/1410636/000156459016029433/awk-ex42_8.htm) | | |

| 4.12 | | | | | | [Officers’ Certificate, dated August 10, 2017, establishing the 2.950% Senior Notes due 2027 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 10, 2017).](http://www.sec.gov/Archives/edgar/data/1410636/000156459017017181/awk-ex41_7.htm) | | |

| 4.13 | | | | | | [Officers’ Certificate, dated August 10, 2017, establishing the 3.750% Senior Notes due 2047 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 10, 2017).](http://www.sec.gov/Archives/edgar/data/1410636/000156459017017181/awk-ex42_8.htm) | | |

| 4.14 | | | | | | [Officer’s Certificate, dated August 9, 2018, establishing the 3.750% Senior Notes due 2028 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 9, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000119312518243833/d552087dex41.htm) | | |

| 4.15 | | | | | | [Officer’s Certificate, dated August 9, 2018, establishing the 4.200% Senior Notes due 2048 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 9, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000119312518243833/d552087dex42.htm) | | |

| 4.16 | | | | | | [Officers’ Certificate, dated May 13, 2019, establishing the 3.450% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 13, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519144941/d748410dex41.htm) | | |

| 4.17 | | | | | | [Officers’ Certificate, dated May 13, 2019, establishing 4.150% Senior Notes due 2049 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 13, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519144941/d748410dex42.htm) | | |

| 4.18 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated April 14, 2020, establishing the terms and authorizing the issuance of the 2.80% Senior Notes due 2030 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed April 14, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000119312520106105/d917260dex41.htm) | | |

| 4.19 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated April 14, 2020, establishing the terms and authorizing the issuance of the 3.45% Senior Notes due 2050 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed April 14, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000119312520106105/d917260dex42.htm) | | |

| 4.20 | | | | | | [Description of American Water Works Company, Inc.’s Equity Securities (filed herewith).](https://www.sec.gov/Archives/edgar/data/1410636/000141063621000101/ex-420x12312020xdescriptio.htm) | | |

| 4.21 | | | | | | [Note Purchase Agreement, as amended, dated December 21, 2006, between American Water Capital Corp. and the purchasers party thereto (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Registration Statement on Form S-1, File No. 333-145757, filed October 11, 2007) with respect to the 5.77% Series D Senior Notes due December 21, 2021.](https://www.sec.gov/Archives/edgar/data/1410636/000119312507216990/dex42.htm) | | |

| 4.22 | | | | | | [Note Purchase Agreement, dated May 15, 2008, between American Water Capital Corp. and the purchasers party thereto (incorporated by reference to Exhibit 10.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed May 19, 2008) with respect to the 6.55% Series H Senior Notes due May 15, 2023.](https://www.sec.gov/Archives/edgar/data/1410636/000119312508118312/dex101.htm) | | |

| 10.1.1 | | | | | | [Second Amended and Restated Credit Agreement, dated as of March 21, 2018, by and among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, Wells Fargo Bank, National Association, as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, and Mizuho Bank, Ltd., PNC Bank, National Association, and U.S. Bank National Association, as co-documentation agents (incorporated by reference to Exhibit 10.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on March 21, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000141063618000088/exhibit10_1tocreditagreeme.htm) | | |

| 10.1.2 | | | | | | [Extension Agreement, dated as of April 9, 2019, among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.17.2 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed May 1, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000141063619000080/a2019q1ex-10172.htm) | | |

| 10.1.3 | | | | | | [Extension Agreement, dated as of April 1, 2020, among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1.3 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed on May](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1013.htm) [6](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1013.htm)[, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1013.htm) | | |

| 10.2 | | | | | | [Term Loan Credit Agreement, dated as of March 20, 2020, by and among American Water, AWCC, Wells Fargo Bank, National Association, as administrative agent and as a lender, Wells Fargo Securities LLC, as a joint lead arranger and joint bookrunner, and each of Mizuho Bank, Ltd. and U.S. Bank National Association, as a joint lead arranger and joint bookrunner, and as a lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, File No. 001-34028, filed March 20, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000061/exhibit101-termloancredita.htm) | | |

| 10.3 | | | | | | [Support Agreement, dated June 22, 2000, together with First Amendment to Support Agreement, dated July 26, 2000, by and between American Water Works Company, Inc. and American Water Capital Corp. (incorporated by reference to Exhibit 10.3 to American Water Capital Corp.’s Registration Statement on Form S-1, File No. 333-145757-01, and American Water Works Company, Inc.’s Registration Statement on Form S-1, File No. 333-145757, filed October 11, 2007).](http://www.sec.gov/Archives/edgar/data/1410636/000119312507216990/dex103.htm) | | |

| 10.4.1* | | | | | | [Letter Agreement, dated February 17, 2015, between Michael A. Sgro and American Water Works Company, Inc. (incorporated by reference to Exhibit 10.4 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed August 5, 2015).](http://www.sec.gov/Archives/edgar/data/1410636/000156459015006249/awk-ex104_303.htm) | | |

| 10.4.2* | | | | | | [Amendment, dated December 6, 2018, to Letter Agreement between Michael A. Sgro and American Water Works Company, Inc. (incorporated by reference to Exhibit 10.6.2 to American Water Works Company, Inc.’s Annual Report on Form 10-K, File No. 001-34028, filed February 19, 2019)](http://www.sec.gov/Archives/edgar/data/1410636/000141063619000041/ex-1062x12312018.htm). | | |

| 10.5* | | | | | | [Offer Letter for Employment, dated May 1, 2019, between American Water Works Company, Inc. and M. Susan Hardwick (incorporated by reference to Exhibit 10.1 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed July 31, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000141063619000147/a2019q2ex-101.htm) | | |

| 10.6* | | | | | | [Offer Letter for Employment, dated February 12, 2020, between American Water Works Company, Inc. and Walter J. Lynch.](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm) [](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[(incorporated by reference to Exhibit 10.1](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[8](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm) [to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No.](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm) [001-34028](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[, filed](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm) [May 6](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[, 20](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[20](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm)[).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1018.htm) | | |

| 10.7* | | | | | | [Offer Letter for Employment, dated April 28, 2020, between American Water Works Company, Inc. and William Varley](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000119/a2020q2ex102varleywill.htm) [](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000119/a2020q2ex102varleywill.htm)[(incorporated by reference to Exhibit 10.](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000119/a2020q2ex102varleywill.htm)[2](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000119/a2020q2ex102varleywill.htm) [to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed August 5, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000119/a2020q2ex102varleywill.htm) | | |

| 10.8* | | | | | | [Offer Letter for Employment, dated August 5, 2020, between American Water Works Company, Inc. and Adam Noble](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000145/a2020q3ex101adamnobleo.htm) [](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000145/a2020q3ex101adamnobleo.htm)[(incorporated by reference to Exhibit 10.](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000145/a2020q3ex101adamnobleo.htm)[1](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000145/a2020q3ex101adamnobleo.htm) [to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed November 4, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000145/a2020q3ex101adamnobleo.htm) | | |

None.

EXHIBIT INDEX

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Exhibit Number | | | | | | Exhibit Description | | |

| 2.1.1# | | | | | | [Stock Purchase Agreement, dated November 20, 2019, by and among American Water Works Company, Inc., New York American Water Company, Inc. and Liberty Utilities Co. (incorporated by reference to Exhibit 2.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 20, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519296612/d806306dex21.htm) | | |

| 2.1.2 | | | | | | [Letter Agreement, dated June 29, 2021, by and among American Water Works Company, Inc., Liberty Utilities (Eastern Water Holdings) Corp. and New York American Water Company, Inc., with respect to the Stock Purchase Agreement, dated November 20, 2019, by and among American Water Works Company, Inc., New York American Water Company, Inc. and Liberty Utilities Co. (incorporated by reference to Exhibit 2.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed June 29, 2021).](http://www.sec.gov/Archives/edgar/data/1410636/000141063621000179/exhibit21-newyorkamericanl.htm) | | |

| 2.2# | | | | | | [Membership Interest Purchase Agreement, dated as of October 28, 2021, by and among American Water Enterprises, LLC, American (USA), LLC, American Water Resources, LLC, Pivotal Home Solutions, LLC, American Water Resources Holdings, LLC, American Water Works Company, Inc. and Lakehouse Buyer Inc. (incorporated by reference to Exhibit 2.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed October 29, 2021).](http://www.sec.gov/Archives/edgar/data/1410636/000119312521312453/d226943dex21.htm) | | |

| 3.1 | | | | | | [Restated Certificate of Incorporation of American Water Works Company, Inc. (incorporated by reference to Exhibit 3.1 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed November 6, 2008).](http://www.sec.gov/Archives/edgar/data/1410636/000119312508227647/dex31.htm) | | |

| 3.2 | | | | | | [Amended and Restated Bylaws of American Water Works Company, Inc. (incorporated by reference to Exhibit 3.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 10, 2020).](http://www.sec.gov/Archives/edgar/data/1410636/000141063620000153/exhibit31-amendedandre.htm) | | |

| 4.1 | | | | | | [Indenture, dated as of October 22, 2007, between American Water Capital Corp. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.4 to American Water Capital Corp.’s Registration Statement on Form S-4, File No. 333-148284, and American Water Works Company, Inc.’s Registration Statement on Form S-4, File No. 333-148284-01, filed December 21, 2007).](http://www.sec.gov/Archives/edgar/data/1410635/000119312507270490/dex44.htm) | | |

| 4.2 | | | | | | [Indenture, dated as of December 4, 2009, between American Water Capital Corp. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 3, 2010).](http://www.sec.gov/Archives/edgar/data/1410636/000119312510273459/dex41.htm) | | |

| 4.3 | | | | | | [Officers’ Certificate, dated December 17, 2012, establishing the 4.300% Senior Notes due 2042 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed December 17, 2012).](http://www.sec.gov/Archives/edgar/data/1410636/000119312512505064/d455208dex41.htm) | | |

| 4.4 | | | | | | [Officers’ Certificate, dated November 20, 2013, establishing the 3.850% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 20, 2013).](http://www.sec.gov/Archives/edgar/data/1410636/000119312513448115/d629514dex41.htm) | | |

| 4.5 | | | | | | [Officers’ Certificate, dated August 14, 2014, establishing the 3.400% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 14, 2014).](http://www.sec.gov/Archives/edgar/data/1410636/000119312514309521/d773032dex41.htm) | | |

| 4.6 | | | | | | [Officers’ Certificate, dated August 14, 2014, providing for a further issuance of the 4.300% Senior Notes due 2042 (incorporated by reference to Exhibit 4.3 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 14, 2014).](http://www.sec.gov/Archives/edgar/data/1410636/000119312514309521/d773032dex43.htm) | | |

| 4.7 | | | | | | [Officers’ Certificate, dated August 13, 2015, establishing the 4.300% Senior Notes due 2045 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 13, 2015).](http://www.sec.gov/Archives/edgar/data/1410636/000119312515290164/d122389dex41.htm) | | |

| 4.8 | | | | | | [Officers’ Certificate, dated August 13, 2015, providing for a further issuance of the 3.400% Senior Notes due 2025 (incorporated by reference to Exhibit 4.3 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 13, 2015).](http://www.sec.gov/Archives/edgar/data/1410636/000119312515290164/d122389dex43.htm) | | |

| 4.9 | | | | | | [Officers’ Certificate, dated November 17, 2016, establishing the 3.000% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 17, 2016).](http://www.sec.gov/Archives/edgar/data/1410636/000156459016029433/awk-ex41_7.htm) | | |

| 4.10 | | | | | | [Officers’ Certificate, dated November 17, 2016, establishing the 4.000% Senior Notes due 2046 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed November 17, 2016).](http://www.sec.gov/Archives/edgar/data/1410636/000156459016029433/awk-ex42_8.htm) | | |

| 4.11 | | | | | | [Officers’ Certificate, dated August 10, 2017, establishing the 2.950% Senior Notes due 2027 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 10, 2017).](http://www.sec.gov/Archives/edgar/data/1410636/000156459017017181/awk-ex41_7.htm) | | |

| 4.12 | | | | | | [Officers’ Certificate, dated August 10, 2017, establishing the 3.750% Senior Notes due 2047 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 10, 2017).](http://www.sec.gov/Archives/edgar/data/1410636/000156459017017181/awk-ex42_8.htm) | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Exhibit Number | | | | | | Exhibit Description | | |

| 4.13 | | | | | | [Officer’s Certificate, dated August 9, 2018, establishing the 3.750% Senior Notes due 2028 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 9, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000119312518243833/d552087dex41.htm) | | |

| 4.14 | | | | | | [Officer’s Certificate, dated August 9, 2018, establishing the 4.200% Senior Notes due 2048 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed August 9, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000119312518243833/d552087dex42.htm) | | |

| 4.15 | | | | | | [Officers’ Certificate, dated May 13, 2019, establishing the 3.450% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 13, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519144941/d748410dex41.htm) | | |

| 4.16 | | | | | | [Officers’ Certificate, dated May 13, 2019, establishing 4.150% Senior Notes due 2049 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 13, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000119312519144941/d748410dex42.htm) | | |

| 4.17 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated April 14, 2020, establishing the terms and authorizing the issuance of the 2.800% Senior Notes due 2030 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed April 14, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000119312520106105/d917260dex41.htm) | | |

| 4.18 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated April 14, 2020, establishing the terms and authorizing the issuance of the 3.450% Senior Notes due 2050 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed April 14, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000119312520106105/d917260dex42.htm) | | |

| 4.19 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated May 14, 2021, establishing the terms and authorizing the issuance of the 2.300% Senior Notes due 2031 (incorporated by reference to Exhibit 4.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 14, 2021).](http://www.sec.gov/Archives/edgar/data/1410636/000119312521161616/d934327dex41.htm) | | |

| 4.20 | | | | | | [Officers’ Certificate of American Water Capital Corp., dated May 14, 2021, establishing the terms and authorizing the issuance of the 3.250% Senior Notes due 2051 (incorporated by reference to Exhibit 4.2 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on May 14, 2021).](https://www.sec.gov/Archives/edgar/data/1410636/000119312521161616/d934327dex42.htm) | | |

| 4.21 | | | | | | [Description of American Water Works Company, Inc.’s Equity Securities (filed herewith).](https://www.sec.gov/Archives/edgar/data/1410636/000141063622000048/ex-421x12312021xdescriptio.htm) | | |

| 4.22 | | | | | | [Note Purchase Agreement, dated May 15, 2008, between American Water Capital Corp. and the purchasers party thereto (incorporated by reference to Exhibit 10.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed May 19, 2008) with respect to the 6.55% Series H Senior Notes due May 15, 2023.](https://www.sec.gov/Archives/edgar/data/1410636/000119312508118312/dex101.htm) | | |

| 10.1.1 | | | | | | [Second Amended and Restated Credit Agreement, dated as of March 21, 2018, by and among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, Wells Fargo Bank, National Association, as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, and Mizuho Bank, Ltd., PNC Bank, National Association, and U.S. Bank National Association, as co-documentation agents (incorporated by reference to Exhibit 10.1 to American Water Works Company, Inc.’s Current Report on Form 8-K, File No. 001-34028, filed on March 21, 2018).](http://www.sec.gov/Archives/edgar/data/1410636/000141063618000088/exhibit10_1tocreditagreeme.htm) | | |

| 10.1.2 | | | | | | [Extension Agreement, dated as of April 9, 2019, among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.17.2 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed May 1, 2019).](http://www.sec.gov/Archives/edgar/data/1410636/000141063619000080/a2019q1ex-10172.htm) | | |

| 10.1.3 | | | | | | [Extension Agreement, dated as of April 1, 2020, among American Water Works Company, Inc., American Water Capital Corp., each of the Lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1.3 to American Water Works Company, Inc.’s Quarterly Report on Form 10-Q, File No. 001-34028, filed on May 6, 2020).](https://www.sec.gov/Archives/edgar/data/1410636/000141063620000080/a2020q1ex-1013.htm) | | |

| 10.2 | | | | | | [Support Agreement, dated June 22, 2000, together with First Amendment to Support Agreement, dated July 26, 2000, by and between American Water Works Company, Inc. and American Water Capital Corp. (incorporated by reference to Exhibit 10.3 to American Water Capital Corp.’s Registration Statement on Form S-1, File No. 333-145757-01, and American Water Works Company, Inc.’s Registration Statement on Form S-1, File No. 333-145757, filed October 11, 2007).](http://www.sec.gov/Archives/edgar/data/1410636/000119312507216990/dex103.htm) | | |

| 10.3* | | | | | | [Offer Letter for Employment, dated as of February 2, 2022, between American Water Works Company, Inc. and M. Susan Hardwick (filed herewith).](https://www.sec.gov/Archives/edgar/data/1410636/000141063622000048/exhibit103-susanhardwick.htm) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (In millions, except per share data) | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| Statement of Operations data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Operating revenues | | | $ | 3,777 | | | | | $ | 3,610 | | | | | $ | 3,440 | | | | | $ | 3,357 | | | | | $ | 3,302 | |

| Net income attributable to common shareholders | | | 709 | | | | | | 621 | | | | | | 567 | | | | | | 426 | | | | | | 468 | | |

| Net income attributable to common shareholders per basic common share | | | $ | 3.91 | | | | | $ | 3.44 | | | | | $ | 3.16 | | | | | $ | 2.39 | | | | | $ | 2.63 | |

| Net income attributable to common shareholders per diluted common share | | | 3.91 | | | | | | 3.43 | | | | | | 3.15 | | | | | | 2.38 | | | | | | 2.62 | | |

| Balance Sheet data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | $ | 24,766 | | | | | $ | 22,682 | | | | | $ | 21,223 | | | | | $ | 19,482 | | | | | $ | 18,482 | |

| Long-term debt and redeemable preferred stock at redemption value | | | 9,333 | | | | | | 8,644 | | | | | | 7,576 | | | | | | 6,498 | | | | | | 5,759 | | |

| Other data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash dividends declared per common share | | | $ | 2.20 | | | | | $ | 2.00 | | | | | $ | 1.82 | | | | | $ | 1.66 | | | | | $ | 1.50 | |

| Net cash provided by operating activities (a) (b) | | | 1,426 | | | | | | 1,383 | | | | | | 1,386 | | | | | | 1,449 | | | | | | 1,289 | | |

| Net cash used in investing activities (b) | | | (2,061) | | | | | | (1,945) | | | | | | (2,036) | | | | | | (1,672) | | | | | | (1,590) | | |

| Net cash provided by financing activities (a) (b) | | | 1,120 | | | | | | 494 | | | | | | 726 | | | | | | 207 | | | | | | 328 | | |

| Capital expenditures included in net cash used in investing activities | | | (1,822) | | | | | | (1,654) | | | | | | (1,586) | | | | | | (1,434) | | | | | | (1,311) | | |

(a) The information for the year ended December 31, 2016 has been revised to reflect the retrospective application of Accounting Standards Update 2016-09, *Improvements to Employee Share-Based Payment Accounting*, which was adopted by the Company as of January 1, 2017.

(b) The information for the year ended December 31, 2016 has been revised to reflect the retrospective application of Accounting Standards Update 2016-18, *Restricted Cash*, which was adopted by the Company as of December 31, 2017.