#1AMERICAN WATER AMERICAN WATER Investor Presentation August 2023#2Forward-Looking Statements Safe Harbor AMERICAN WATER This presentation includes forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. They are not guarantees or assurances of any outcomes, financial results, levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking statements included in this presentation. The factors that could cause actual results to differ are discussed in the Appendix to this presentation, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, as filed with the SEC on July 26, 2023. Non-GAAP Financial Information This presentation includes non-GAAP financial measures. Further information regarding these non-GAAP financial measures, including a reconciliation of each of these measures to the most directly comparable GAAP measure, is included in the Appendix to this presentation. 2#3Business Review AMERICAN WATER 3#4Pure-Play Regulated Water and Wastewater Utility Business Washington AMERICAN WATER NATIONAL FOOTPRINT Iowa Ohio Illinois Utah California Indiana Kansas Missouri Hawaii Oklahoma Texas Regulated Operations* 53,500 miles of pipe 570 water treatment plants 175 wastewater treatment plants 1,100 wells and 73 dams New York AMERICAN WATER Regulated Customer Count* 4.9% 11.2% 22.5% Pennsylvania New Jersey 5.6% West Virginia 3.4M Total Maryland Virginia Kentucky Tennessee 9.6% Regulated Water and Wastewater Operations Alabama Georgia Military Services Group 10.7% Florida Louisiana Military Services Group . Regulated-like earnings Serves 18 military installations 12 Army 5 Air Force • 1 Navy Customer Connections 14.6% 20.9% Pennsylvania New Jersey ■Missouri Illinois Indiana California ■ West Virginia ■ Other *As of December 31, 2022 4#5Highly Fragmented Water/Wastewater Industry Creates Opportunity Water Utilities AMERICAN WATER Electric Utilities Natural Gas Utilities Industry Opportunity Water 16% Investor Owned 84% Public & Other Wastewater 2% Investor Owned 98% Public & Other Water Utilities Source: EPA SDWIS Federal Reports Search www3.epa.gov/enviro/facts/sdwis American Water Footprint Ideal for industry consolidation opportunities Target 5,000-50,000 customer connections per acquisition Wastewater focus (AWK customer connections mix- 92% water & 8% wastewater) Electric Utilities Source: Form EIA-861 detailed data files www.eia.gov/electricity/data/eia8 Gas Utilities Source: EPA F.L.I.G.H.T. Greenhouse Gas Emissions from Large Facilities Ghgdata.epa.gov/ghgp/main.do# 5#6Focused on Executing the Plan and Building on Our Strengths AMERICAN WATER Safety Safety is both a strategy & core company value. Safety is More Than "the Right Thing to Do" Performance Going beyond the minimum requirement to solidify our position as a leader in O&M excellence. Excellence is Getting the Fundamentals Right People Inclusion & empowerment pave a path for employee & company success. Employees are the Heart of Our Business Growth Growth enables investment in critical infrastructure and communities and leads to improved affordability. Industry Leaders in Customer Growth ESG ESG affirms the values we have upheld for decades. Leading by Example ESG™ at AWK 6#7Regulated Investments to Support System Needs Capital Plan ($ in billions) $2.9 AMERICAN WATER $30 - $34 $3 - $4 Regulated Acquisitions $14-$15 $2.6 $0.4 $0.3 $1.5 - $2.0 $1.9 $0.1 $27 - $30 $2.5 $2.3 $12.5 - $13.0 $1.8 2021 2022 2023E 2023 - 2027 2023-2032 Regulated System Investments 7#8Regulated Capital Expenditures by Purpose AMERICAN WATER 2023-2032 3-5% 4-6% 5-7% 5-7% 10-12% 68-70% Infrastructure Renewal Resiliency Water Quality Operational Efficiency, Technology & Innovation System Expansion Other 8#9Investments Drive Continued Rate Base Growth ($ in billions) 8-9% CAGR for Rate Base I I I | Estimated Rate Base* AMERICAN WATER As of 12/31/2022 $23.2 $17.8 Net Utility Plant I $16.3 $15.0 Less $13.7 I I $12.5 Advances for Construction $0.3 $11.6 $10.7 I | CIAC Contributions in Aid of Construction $1.5 Net Deferred Income Taxes $3.6 I $5.4 I Total Estimated Rate Base $17.8 2016 2017 2018 2019 2020 2021 2022 I 2032 Note: annual rate base totals include New York American Water through 2021. New York's 2021 rate base was $0.5 billion. * An approximation of rate base, which includes Net Utility Plant not yet included in rate base, pending rate case filings/outcomes. 9#10Timely Recovery of Capital and Operating Costs AMERICAN WATER 2 1 American Water's Jurisdictions 10 10 As of 2010 As of 2022 11 11 10 5 5 7 1 6 6 Revenue Stabilization Infrastructure Mechanisms Expense Mechanisms Consolidated Tariffs Fair Value Forward Looking Test Year Capital Recovery (2023-2027 Plan) Infrastructure Surcharge Mechanisms =45% Forward Test Years =30% Traditional Recovery =25% 10 10#11Strategies for Growth thru Regulated Acquisitions AWK Growth Outlook 7-9% EPS CAGR Target (2023-2027 Plan) Regulated Acquisitions Regulated Investment CAPEX Military Services 0.2% Group 1.5-2.5% 5-7% AMERICAN WATER Regulated Acquisition Strategy Fundamentals Continued focus on acquisitions in the target range of 5,000 to 50,000 customers; larger acquisitions where appropriate Achieve (on avg.) 55,000 to 85,000 new customer connections annually; $300-400M/year avg. investment Leverage water footprint to acquire wastewater systems Leadership in legislative/regulatory policy to benefit customers and advance solutions to industry challenges Continue to build robust pipeline of opportunities ESG ESG™ at AWK 11#12Continued Focus on Customer Affordability AMERICAN WATER 0.9% $ Avg. Monthly Residential Water Bill (AWK Customers) as % of Median Household Income* 0.8% 0.7% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 2010 2012 2014 2016 2018 2020 2021 2022 Values around Affordability Focused on keeping customer bills affordable compared to income (wallet share) ➤ Culture of continuous improvement, diligent cost management, and technology enhancements helps drive affordability Supportive of state legislation on consolidated tariffs that allows customers to benefit from efficiencies of scale ➤ Continue to promote low-income assistance programs and tariffs * Estimated based on data from the US Census Bureau American Community Survey based on zip codes served by American Water. American Water does not collect household income data from its customers. 12#13Revenue Growth and Customer Growth Help Drive Operating Cost Efficiency AMERICAN WATER 46.1% 41.0% 39.1% Regulated O&M Efficiency Ratio* 36.6% 35.6% 34.3% 34.1% 33.7% < 30.0% ** 2010 2012 2014 2016 2018 2020 2021 2022 2027 Target • Efficiency Drivers: Growing Revenues & Controlling Costs In early years (thru 2016), efficiency gains were steeper as culture of cost management formed Recently, more incremental efficiency gains driven by revenue growth, cost management and technology * Non-GAAP Measure - O&M Efficiency Ratio = Adjusted Regulated O&M Expenses (O&M Expenses is most comparable GAAP measure) / Adjusted Regulated Operating Revenues (Operating Revenues is most comparable GAAP measure). This calculation assumes purchased water revenues approximate purchased water expenses. ** A reconciliation to a most comparable forward-looking GAAP measure is not available without unreasonable effort 13#14Strong Balance Sheet and Credit Ratings AWK Long-Term Senior Unsecured Ratings S&P Global A (Stable Outlook) Moody's Baa1 (Stable Outlook) Low risk business profile ✓ Strong regulatory jurisdictions ✓ Supportive financial plans Ratings and Stable Outlook affirmed at S&P / Moody's (Feb. '23/Dec. '22) Consolidated Debt Maturity Profile as of June 30, 2023 (Rounded) ($ in millions) $1,500 Total Debt to Total Capital** AMERICAN WATER As of June 30, 2023 54% Long-Term Target <60% Liquidity Profile ($ in millions, rounded) Available Liquidity as of 6/30/23 $780 $700 $600 $475 $3,469 $794 $720 Cash $100 $2,675 Credit 2023 2024 2025 2026* 2027 *Proceeds of $720 million from the note related to the sale of HOS are due to the Company in December 2026 ** Percentage shown is net of cash and cash equivalents of $794 million Credit Facility Amended on 10/26/22 Increased Credit Facility capacity by $500 million to $2.75 billion from $2.25 billion Extended maturity to October 2027 Increased capacity to support growing business and capital investment plan 14#15Top Tier Dividend Growth Continues in 2023 8.0% Increase Aligns with Long-Term Target ($ rounded) AWK's Strong and Consistent Dividend Growth* $2.78 $2.57 $2.36 $2.15 $1.96 $1.78 2018 2019 2020 * Future dividends are subject to approval of the American Water Board of Directors AMERICAN WATER 2021 2022 2023E 15#16American Water's High Growth Outlook and ESG Leadership Widely Recognized; Long Runway Ahead "Our investments in community systems that we acquire through our regulated business will drive significant ESG impacts for decades to come." - Susan Hardwick, American Water President & CEO ESG at AWK TM AMERICAN WATER Military Services 0.2% Group Regulated 1.5-2.5% Acquisitions Bloomberg Gender-Equality Index 2022 S&P Global Ratings ESG Evaluation Score of 87 (out of 100); Highest Score Given to a U.S. Utility and 3rd Highest Globally Included in the Bloomberg Gender Equality Index for the 5th Consecutive Year (100) Regulated Investment CAPEX 5-7% Named to Newsweek's Most Trustworthy Companies American Water Ranked #19 on Barron's 100 Most Sustainable Companies 16#17Military Services Group Provides Strategic Value Currently Serving 18 Military Installations T AMERICAN WATER 70 Additional Installation Opportunities Military Services Group Regulated-like earnings Favorable ROI opportunity Capital light/cash flow positive Positive branding Leverage core competencies Dual wins for AWK & U.S. ESG values +4 이 12 Army 5 Air Force 1 Navy 15 Army 23 Air Force 19 Navy 13 Marine Corps O Marine Corps 17#18Strong and Sustainable Growth Outlook for Future AMERICAN WATER Earnings Growth Affirmed Target Targeting 7-9% EPS growth in our 2023-2027 plan and beyond Regulated Investment CAPEX Regulated Acquisitions Military Services =0.2% Group 1.5-2.5% 5-7% Dividend Growth ESG Leadership Affirmed Target Targeting 7-9% dividend growth* in Adds to TSR Exceptional 82% Total Shareholder our 2023-2027 plan and beyond Return over last 5 years** $ Affordability Adds to TSR <=1% Avg. Monthly Residential Water Bill as % of MHI*** * ** Future dividends are subject to approval of the American Water Board of Directors. As of 6/30/23 end date. Source: FactSet. *** Estimated Median Household Income (MHI) based on data from the US Census Bureau American Community Survey based on zip codes served by American Water. American Water does not collect household income data from its customers. 18#19AMERICAN WATER Second Quarter/YTD 2023 Results 1995#20Strong Q2 and 1H 2023 Results EPS Growth Driven by Regulatory Execution, Favorable Weather Earnings Per Share $2.07 $2.37* $1.44 $1.20 $0.87 $0.91 2022 2023 Q1 Q2 *YTD EPS in 2023 does not sum as a result of the common equity issuance executed in March 2023 AMERICAN WATER Q2/YTD 2023 Highlights ✓ 2023 Q2 EPS of $1.44 driven by higher revenue on increased rate base; favorable impact due to weather of ~$0.07 ✓ 1H 2023 includes new rates effective in PA, IL, VA and MO; cases filed in IN, WV and KY; CA case proceeding as expected ✓ Invested approx. $1.2 billion in infrastructure in 1H 2023 ✓ $555M of acquisitions under agreement as of June 30 ✓ Issued approx. $1.7 billion in common stock in March ✓ Issued $1.0 billion in exchangeable senior notes in June, due 2026 2021-2022 Sustainability Report published in July 20#21Details of Second Quarter 2023 EPS $1.20 0.07 Q2 2022 Weather in Q2 2023 0.47 AMERICAN WATER (0.13) (0.06) $1.44 (0.11) * Revenue O&M Depreciation LT Financing Q2 2023 ~75% of inflationary costs incl. in revenue from recent rate cases Investment Growth *Reflects $(0.10) per share of share count dilution, which also offsets the amount of avoided interest expense. 21#22Details of Year-To-Date 2023 EPS 0.07 $2.07 0.79 June YTD 2022 Weather in Q2 2023 Revenue AMERICAN WATER (0.25) (0.12) $2.37 (0.13) (0.04) (0.02) O&M Depreciation * LT Financing ST Debt Financing Other, net June YTD 2023 Investment Growth ~75% of inflationary costs incl. in revenue from recent rate cases *Reflects $(0.11) per share of share count dilution, which also offsets the amount of avoided interest expense. 22#232023 EPS Guidance Affirmed $4.45* 1.35-1.45 2022 Actual Revenue (0.38-0.42) (0.24-0.26) O&M Depreciation (0.36-0.38) 0.02-0.04 AMERICAN WATER $4.72-$4.82* (0.08-0.10) ** LT Financing ST Debt Financing, net of Interest Income Other, net 2023 Guidance ~75% of inflationary costs incl. in revenue from recent rate cases Excludes weather of $0.06 per share favorable in Q3 2022 and $0.07 per share favorable in Q2 2023 Investment Growth ** Reflects $(0.28-0.30) per share of share count dilution, which also offsets the amount of avoided interest expense. 23#242023 EPS Guidance* and Long-Term Targets Affirmed AWK EPS Growth Triangle 7-9% EPS CAGR Target Business Mix 100% Regulated and Regulated-Like Earnings Regulated Acquisitions Military Services 0.2% Group AMERICAN WATER 2023 EPS Guidance Affirming 2023 EPS Guidance Range of $4.72 to $4.82, on a weather-normalized basis Higher revenues from investments in rate base while managing operating costs drives EPS growth Successful regulatory, financing, and operational execution drives confidence in our outlook 1.5-2.5% Long-Term Financial Targets ➤ Attractive, Long-Term Sustainable Shareholder Returns Regulated Investment CAPEX 5-7% *On a weather-normalized basis ●• EPS Growth 7-9% . Dividend Growth 7-9% . ESG Leadership Premium + • Customer Affordability + ➤ Rate Base Growth 8-9% Dividend Payout Ratio 55-60% ➤Debt to Capital <60% 24#25Successfully Completed 2023 Financing Plan AMERICAN WATER Closing Date ~$1.7 Billion Common Stock Issuance Public Offering Price Use of Proceeds March 3, 2023 12,650,000 Shares $135.50/Share Repaid outstanding commercial paper obligations and for general corporate purposes ~$1.0 Billion Exchangeable Senior Notes due 2026 Executed on our plan to issue a significant portion of expected $2B of equity need in. Five-Year Plan (2023-2027) Successfully completed our long-term debt financing for the year with issuance of Exchangeable Senior Notes Both issuances demonstrate proactive execution in a challenging market environment to fund growth and manage financing costs for the benefit of customer affordability and shareholder value Size Interest Rate Conversion Premium Settlement Use of Proceeds 3.625% per year ~22.5% Cash, up to the aggregate principal amount (remaining value, if any, settled in cash, shares, or combination of cash/shares, at AWCC's election) Repaid outstanding commercial paper obligations and for general corporate purposes 25#26Strong Outlook for Acquisitions in 2023 and Beyond AMERICAN WATER Butler Area Sewer Authority, PA Wastewater Closed As of June 30, 2023 7,100 Customer Connections 10 Acquisitions in 5 States, $33M ΜΟ NJ { ≥ = ≤ 2 1 1 4 2 Under Agreement As of June 30, 2023 74,800 Customer Connections 32 Acquisitions in 10 States, $555M PA MO IL WV VA CA IN ΙΑ ≤ NJ MD 1 1 2 2 3 33 M 3 4 $232 million purchase price 14,700 equivalent customer connections Signed October 11, 2022 Expected to close by the end of 2023, pending regulatory approval. Granite City, IL Wastewater $83 million purchase price 26,000 equivalent customer connections Signed April 6, 2023 Now expected to close by the end of 2023, pending regulatory approval. 1.3 Million Customer Connections in Pipeline Sign Purchase Agreement Receive Appraisals and Pursue Regulatory Approvals Close Transaction, with Customers Billed at their Historical or Modified Rates Regulated Acquisitions: Typical Fair Market Value Process Upon Next Rate Case, Move Customers onto Applicable AW Utility Rates 26#27Strong Cap Ex Growth in 1H 2023, as Planned Drives Improved Water Quality, Reliability, and Earnings Growth AWK EPS Growth Triangle 7-9% EPS CAGR Target Business Mix 100% Regulated and Regulated-Like Earnings Regulated Acquisitions Regulated Investment CAPEX Military Services 0.2% Group AMERICAN WATER Capital Investment $2.9B $0.4B Regulated Acquisitions 1.5-2.5% $1.25B $240M $1.20B $33M $2.5B 5-7% $1.0B $1.15B Regulated System Investments 1H 2022 1H 2023 2023E 27#28General Rate Case and Regulatory Updates AMERICAN WATER CALIFORNIA AMERICAN WATER INDIANA AMERICAN WATER WEST VIRGINIA AMERICAN WATER KENTUCKY AMERICAN WATER VIRGINIA • Rate Cases in Progress Rate case filed 7/1/22 • Will establish rates for the period 2024-2026 Three-year capital investment of $462 million • Rates expected to be effective beginning Jan. 2024 • Rate case filed 3/31/23 • • • Capital Investment of $875 million • Rates expected to be effective over three steps beginning Jan. 2024, May 2024, and May 2025 Rate case filed 5/1/23 • Capital Investment of $340 million • Rates expected to be effective beginning Feb. 2024 • Rate case filed 6/30/23 • Capital Investment of $330 million • Rates expected to be effective beginning Feb. 2024 • Completed Rate Cases in 2023 • General Rate Case • Additional authorized revenues of $11 million Federal PFAS Recap On March 14, 2023, the United States Environmental Protection Agency (EPA) announced the proposed National Primary Drinking Water Regulations for six per- and polyfluoroalkyl substances (PFAS). Based upon preliminary estimates, American Water believes an investment in excess of $1 billion of capital to install additional treatment facilities over a 3 to 5-year period could be possible in order to comply with the rule as proposed. We also believe operating expenses related to testing and treatment could be near $50 million annually. American Water is currently part of Multi-District Litigation against multiple PFAS manufacturers because we firmly believe that the ultimate responsibility for the cleanup of these contaminants should fall to the polluters. MISSOURI AMERICAN WATER • • General Rate Case • Additional authorized revenues of $95 million, including $51M for infrastructure surcharges previously approved • Effective 5/28/23 Other Regulatory Updates On June 29, the California CPUC issued a decision on the cost of capital application authorizing an 8.98% ROE with an equity component of 57.04%. On June 30, Cal Am filed an advice letter to seek a 52 basis point increase to Cal Am's ROE for 2023, which was approved on July 25, increasing the return on equity to 9.50%, effective July 31. AMERICAN WATER • Effective 4/24/23 28#29New Sustainability Report and Disclosures Highlights AWK's ESG Leadership and Commitment to Transparency American Water Sustainability Report 2021-2022 AMERICAN WATER WE KEEP LIFE FLOWING AMERICAN WATER American Water 2021-2022 Sustainability Report • Highlights our commitment to excellent water quality, customer affordability, and investing in infrastructure, among other key topics identified in the Company's most recent materiality assessment Prepared in accordance with Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD), and other leading standards Additional Recent Disclosures and Recognition . Inclusion, Diversity & Equity website, DiversityatAW.com, refreshed with employee and Board diversity results through June 30, 2023 First time disclosure of the estimated racial diversity of the communities we serve¹ compared to the racial diversity of our employees as self-identified Received an upgraded MSCI ESG Rating, improving from "A" to "AA" Annual Sustainability Report Publication Will Begin in 2024 (Containing FY 2023 Actuals) 1 Estimated based on residential customer zip code matching of United States 2022 American Community Survey data 29#30Appendix AMERICAN WATER 30#31Forward-Looking Statements AMERICAN WATER Certain statements made, referred to or relied upon in this presentation including, without limitation, with respect to 2023 earnings guidance, the Company's long-term financial, growth and dividend targets, the ability to achieve the Company's strategies and goals, including with respect to its ESG focus, the outcome of the Company's pending acquisition activity, the amount and allocation of projected capital expenditures; and the amount and timing of estimated revenues from rate cases and other government agency authorizations, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. In some cases, these forward-looking statements can be identified by words with prospective meanings such as "intend," "plan," "estimate," "believe," "anticipate," "expect," "predict," "project," "propose," "assume," "forecast," "outlook," "likely," "uncertain," "future," "pending," "goal," "objective," "potential," "continue," "seek to," "may," "can," "will," "should" and "could" and or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on American Water's current expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results, levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates, assumptions, known and unknown risks, uncertainties and other factors. The Company's actual results may vary materially from those discussed in the forward-looking statements included in this presentation as a result of the factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent filings with the SEC, and because of factors such as: the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates; the timeliness and outcome of regulatory commissions' and other authorities' actions concerning rates, capital structure, authorized return on equity, capital investment, system acquisitions and dispositions, taxes, permitting, water supply and management, and other decisions; changes in customer demand for, and patterns of use of, water and energy, such as may result from conservation efforts, or otherwise; limitations on the availability of the Company's water supplies or sources of water, or restrictions on its use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors; a loss of one or more large industrial or commercial customers due to adverse economic conditions, or other factors; changes in laws, governmental regulations and policies, including with respect to the environment, health and safety, data and consumer privacy, 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 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; weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, pandemics (including COVID-19) and epidemics, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms, sinkholes and solar flares; the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions; 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 the expansion of its businesses; exposure or infiltration of the Company's technology and critical infrastructure systems, including the disclosure of sensitive, personal or confidential information contained therein, through physical or cyber attacks or other means; the Company's ability to obtain permits and other approvals for projects and construction of various water and wastewater facilities; changes in the Company's capital requirements; the Company's ability to control operating expenses and to achieve operating efficiencies; the intentional or unintentional actions of a third party, including contamination of the Company's water supplies or the water provided to its customers; the Company's ability to obtain and have delivered adequate and cost-effective supplies of pipe, equipment (including personal protective equipment), chemicals, power and other fuel, water and other raw 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 its operational growth projections, either individually or in the aggregate, and capitalize on growth opportunities, including, among other things, with respect to acquiring, closing and successfully integrating regulated operations, the Company's Military Services Group entering into new military installation contracts, price redeterminations and other agreements and contracts with the U.S. government, and realizing anticipated benefits and synergies from new acquisitions; risks and uncertainties following the completion of the sale of the Company's Homeowner Services Group ("HOS"), 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 under the seller note when due and the ability of the Company to redeploy successfully and timely the net proceeds of this transaction into the Company's Regulated Businesses; risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations; cost overruns relating to improvements in or the expansion of the Company's operations; the Company's ability to successfully develop and implement new technologies and to protect related intellectual property; the Company's ability to maintain safe work sites; the Company's exposure to liabilities related to environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers; the ability of energy providers, state governments and other third parties to achieve or fulfill their greenhouse gas emission reduction goals, including without limitation through stated renewable portfolio standards and carbon transition plans; changes in general economic, political, business and financial market conditions; access to sufficient debt and/or equity capital on satisfactory terms and as needed to support operations and capital expenditures; fluctuations in inflation or interest rates and the Company's ability to address or mitigate the impacts thereof; 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; fluctuations in the value of, or assumptions and estimates related to, its benefit plan assets and liabilities, including with respect to its pension and other post-retirement benefit plans, that could increase expenses and plan funding requirements; changes in federal or state general, income and other tax laws, including (i) future significant tax legislation or regulations; and (ii) the availability of, or the Company's compliance with, the terms of applicable tax credits and tax abatement programs; migration of customers into or out of the Company's service territories and changes in water and energy consumption resulting therefrom; the use by municipalities of the power of eminent domain or other authority to condemn the systems of one or more of the Company's utility subsidiaries, or the assertion by private landowners of similar rights against such utility subsidiaries; any difficulty or inability to obtain insurance for the Company, its inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or its inability to obtain reimbursement under existing or future insurance programs and coverages for any losses sustained; the incurrence of impairment charges, changes in fair value and other adjustments related to the Company's goodwill or the value of its other assets; labor actions, including work stoppages and strikes; the Company's ability to retain and attract highly qualified and skilled employees and/or diverse talent; civil disturbances or unrest, or terrorist threats or acts, or public apprehension about future disturbances, unrest, or terrorist threats or acts; and the impact of new, and changes to existing, accounting standards. 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 American Water's annual, quarterly and other SEC filings, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking statements American Water makes speak only as of the date of this presentation. American Water does not have or undertake any obligation or intention to update or revise any forward- looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as otherwise required by the federal securities laws. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on the Company's businesses, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive. 31#32Non-GAAP Financial Information AMERICAN WATER This presentation includes adjusted regulated O&M efficiency ratios, both historical and forward-looking, which exclude from their calculation (i) estimated purchased water and other revenues and purchased water expenses, (ii) the impact of the Freedom Industries chemical spill in 2014 and certain related settlement activities recognized in 2016 and 2018, (iii) the estimated impact in 2012 and 2014 of weather, (iv) as to operating revenues, the amortization of excess accumulated deferred income taxes, and (v) the allocable portion of non-O&M support services costs, mainly depreciation and general taxes. Also, an alternative presentation of these ratios has been provided for each of 2010, 2012, 2014 and 2016, which includes a pro forma adjustment for the impact of the Tax Cuts and Jobs Act of 2017, and includes for 2012, 2014 and 2016 the impact of our implementation of Accounting Standards Update 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit, on January 1, 2018. These items were excluded from the O&M efficiency ratio calculation as they are not reflective of management's ability to increase the efficiency of our regulated businesses. For that reason, these adjusted regulated O&M efficiency ratios constitute "non-GAAP financial measures" under SEC rules. We evaluate our operating performance using these ratios and believe that the presentation of them is useful to investors because the ratios directly measure improvement in the operating performance and efficiency of our regulated businesses. These ratios are derived from our consolidated financial information but are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures supplement and should be read in conjunction with our GAAP disclosures and should be considered as an addition to, and not a substitute for, any GAAP measure. These ratios (i) are not accounting measures based on GAAP; (ii) are not based on a standard, objective industry definition or method of calculation; (iii) may not be comparable to other companies' operating measures; and (iv) should not be used in place of the GAAP information provided elsewhere in this presentation. Management is unable to present a reconciliation of adjustments to the components of the forward-looking adjusted regulated O&M efficiency ratio without unreasonable effort because management cannot reliably predict the nature, amount or probable significance of all the adjustments for future periods; however, these adjustments may, individually or in the aggregate, cause each of the non-GAAP financial measure components of the forward-looking ratios to differ significantly from the most directly comparable GAAP financial measure. Set forth in this appendix are tables that reconcile each of the components of our historical adjusted regulated O&M efficiency ratios to its most directly comparable GAAP financial measure. All references throughout this presentation to EPS or earnings per share refer to diluted EPS attributable to common shareholders. 32#33State Legislation & Regulation Enable Growth Fair Market Value 11 Consolidated Tariffs 11 Forward Looking Test Year 9 AMERICAN WATER Infrastructure Mechanisms 10 10 G ≤ = ≥ ≥ CA MO CA MO J CA KY NJ ΙΑ NJ HI PA IL PA ΙΑ TN VA IN VA IL WANN PA IN VA ≤ = ≥ ≥ IA NJ PA TN KY VA KY WV KY WV IN MO WV MD MD Water Quality Accountability Legislation 3 IN, MO, NJ 33#34Closed Acquisitions June 30, 2023 NUMBER STATE WATER CUSTOMER CONNECTIONS OF SYSTEMS Missouri 4 New Jersey 2 Illinois Indiana 600 1,600 2 1,300 1 200 AMERICAN WATER WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS 600 1,200 1,400 3,000 1,300 2,600 200 Pennsylvania 1 100 100 Total 10 3,800 3,300 7,100 34#35Acquisitions Under Agreement June 30, 2023 NUMBER STATE WATER CUSTOMER CONNECTIONS OF SYSTEMS Pennsylvania Missouri 9 4 1,800 1,000 AMERICAN WATER WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS 29,600 900 31,400 1,900 Illinois 600 4 26,400 27,000 West Virginia 3 3,700 500 4,200 Virginia 3 1,600 1,400 3,000 California 3 1,300 1,300 Indiana 2 200 200 Iowa 2 200 100 300 New Jersey 1 Maryland Total 3,800 3,800 1 1,700 1,700 32 12,100 62,700 74,800 35 55#36Rate Filings Summary ($ in millions) Rate Filings Completed* Effective since January 1, 2023 $67 $340 $273 Requested Revenue in Pending Base Rate Proceedings AMERICAN WATER $151 $4 $155 Rate Cases (Includes Step Increases) Infrastructure Charges Total Rate Cases* ** Infrastructure Charges Total * Annualized revenue increase for rates effective since January 1, 2023 ** Excludes revenue already approved through infrastructure mechanisms 36#37Rates Effective Since... ($ in millions) January 1, 2023 AMERICAN WATER Rate Cases & Step Increases Date Effective Annualized Revenue Increases Infrastructure Charges Date Effective Annualized Revenue Increases Illinois 1/1/2023 $67(a) West Virginia (DSIC) 1/1/2023 $7 Pennsylvania (DSIC) 1/1/2023 3 California, Step Increase 1/1/2023 13 Missouri (WSIRA) 1/16/2023 14 Pennsylvania 1/28/2023 138(b) Indiana (SEI) 3/8/2023 6(e) Indiana (DSIC) 3/23/2023 20 Virginia 4/24/2023 11(c) New Jersey (DSIC) 4/29/2023 16 New Jersey (WSIC) 6/29/2023 1 Missouri 5/28/2023 44(d) Sub-Total $67 Sub-Total $273 2023 Total $340 a) The Company's Illinois subsidiary was authorized additional annualized revenues of $67.1 million, excluding reductions in revenues for infrastructure surcharges in the amount of $18.3 million. b) The Company's Pennsylvania subsidiary was authorized additional annualized revenues of $138 million, excluding reductions in revenues for infrastructure surcharges in the amount of $24.3 million. c) On April 24, 2023, the Company's Virginia subsidiary was authorized additional annualized revenues of $10.75 million. Interim rates were effective May 1, 2022, and the difference between interim and final Commission approved rates are subject to refund with interest within 90-days of the date of the Order. with carrying 37 d) The Company's Missouri subsidiary was authorized additional annualized revenues of $44.3 million, excluding reductions in revenues for infrastructure surcharges in the amount of $50.7 million. e) The Company's Indiana subsidiary was authorized additional annualized revenues of $5.5 million, 80% of which will be collected now, the remaining 20% will be collected in the next rate case, costs.#38Pending Rate Case Filings ($ in millions) Rate Cases Filed California (a) Indiana (b) West Virginia (c) Kentucky (o (d) AMERICAN WATER Docket/Case Number Date Filed Case No. A.22-07-001 7/1/2022 Requested Revenue Increase $37 ROE Requested Rate Base NA $921 Cause No. 45870 3/31/2023 43 10.60% 1,614 Docket No. 23-0383-W-42T 5/1/2023 45 10.50% 955 Case No. 2023-00191 6/30/2023 26 10.75% 588 Infrastructure Charges Filed Kentucky (QIP) Case No. 2023-00030 3/1/2023 Sub-Total $151 $4 Sub-Total $4 Total $155 $4,078 $30 $30 $4,108 a) b) c) The Company's California subsidiary has requested additional annualized revenues of $55.8 million for test year 2024. This excludes the proposed step rate and attrition rate increase for 2025 and 2026 of $19.5 million and $19.8 million. The total revenue requirement request, based on present rates effective at the time of filing, for the three year rate case cycle is $95.1 million. The Company updated its filing in January 2023 to incorporate a decoupling proposal, the revised requested additional annualized revenues for the test year 2024 is $36.5 million. This excludes the proposed step rate and attrition rate increase for 2025 and 2026 of $20.1 million and $19.8 million. The total revenue requirement request for the three year rate case cycle, incorporating updates to present rate revenues and forecasted demand, is $76.4 million. The Company's Indiana subsidiary has requested additional annualized revenues of $43.2 million for Step 1 proposed to effective Jan 2024, this excludes the $40.5 million for infrastructure surcharges. This excludes the proposed step 2 and 3 rate increase proposed to be effective in May 2024 and May 2025 in the amount of $18.1 million and $25.4 million, respectively. The total revenue requirement request, based on present rates effective at the time of filing, for the three step rate case cycle is $86.7 million. The Company's West Virginia subsidiary has requested additional annualized revenues of $44.9 million, this excludes the $6.9 million for infrastructure surcharges. The Company's Kentucky subsidiary has requested additional annualized revenues of $26.1 million, this excludes the $9.8 million for infrastructure surcharges. 38#39Regulatory Information - Top 10 States AMERICAN WATER CALIFORNIA ILLINOIS INDIANA KENTUCKY Authorized Rate Base* $667,632(g) $1,642,200 $1,182,170 $443,654 MISSOURI $2,318,849c) ROE 9.50% (a) 9.78% 9.80% 9.70% Equity Effective Date of Rate Case 57.04% (a) 1/1/2021(g) 49.00% 53.41% (b) 48.90% 9.75%(d) 50.00% (e) 1/1/2023 5/1/2020 6/28/2019 5/28/2023 NEW JERSEY PENNSYLVANIA TENNESSEE VIRGINIA WEST VIRGINIA Authorized Rate Base* $4,146,492 $5,141,180(c) $132,015 $275,038(c) $734,028 ROE 9.60% 10.00% (d) 10.00% 9.70% 9.80% Equity 54.56% 55.20%(e) 34.38% 40.73% 47.97% Effective Date of Rate Case 9/1/2022 1/28/2023 11/1/2012 4/24/2023(f) 2/25/2022 *Rate Base stated in $000s a) On June 29, 2023, Decision 23-06-025 set the authorized cost of capital through 2024. CA has a separate Cost of Capital case which sets the rate of return outside of a general rate proceeding. The decision established an ROE of 8.98% effective 30-days after the decision date. On June 30, 2023, the Company filed to implement an automatic ROE adjustment to 9.50% for 2023 based on the Commission approved Water Cost of Capital Adjustment Mechanism (WCCM), which was approved on July 25, 2023, increasing the return on equity to 9.50%, effective July 31, 2023. b) The Authorized Equity excludes cost-free items or tax credit balances at the overall rate of return which lowers the equity percentage as an alternative to the common practice of deducting such items from rate base. c) The Authorized Rate Base listed is the Company's view of the Rate Base allowed in the case; the Rate Base was not disclosed in the Order or the applicable settlement agreement. d) The ROE is the Company's view of the ROE allowed in the case; however, the ROE was not disclosed in the Order or the applicable settlement agreement. e) f) The equity ratio listed is the Company's view of the equity ratio allowed in the case; the actual equity ratio was not disclosed in the Order or the applicable settlement agreement. Interim rates were effective May 1, 2022 and received final Order April 24, 2023. g) The Rate Base and Effective date are based off of Year 1 of the rate case. Annual adjustments are made for Year 2 and 3 which reflect authorized capital improvements for Rate Base and inflationary adjustments for O&M. 39#40Reconciliation Table: Regulated Segment O&M Efficiency Ratio Regulated Segment O&M Efficiency Ratio (A Non-GAAP Unaudited Number) ($ in millions) FY 2010 FY 2012 FY 2014 FY 2016 FY FY 2018 2020 FY 2021 FY 2022 AMERICAN WATER Total operations and maintenance expense $1.291 $1,330 $1,350 $1,504 $1,479 $1,622 $1,777 $1,589 Less: Operations and maintenance expense - Other 196 Total operations and maintenance expense - Regulated Businesses Less: $1,095 200 $1,130 238 $1,112 328 $1,176 320 $1,159 364 $1,258 452 $1,325 244 $1,345 Regulated purchased water expense 100 110 122 122 133 149 153 154 Allocation of non-operation and maintenance expenses 29 35 39 30 31 41 34 31 Impact of Freedom Industries activities 10 65 (20) 0 0 0 Estimated impact of weather 5 (2) 0 0 0 Adjusted operations and maintenance expense - Regulated Businesses (a) $966 $980 $943 $959 $1,015 $1,068 $1,138 $1,160 Total operating revenues $2,555 $2,854 $3,011 $3,302 $3,440 $3,777 $3,930 $3,792 Less: Operating Revenues - Other 270 290 337 431 456 522 546 287 Operating Revenues - Other Total pro forma operating revenues-Regulated Businesses $2,285 $2,564 $2,674 $2,871 $2,984 $3,255 $3,384 $3,505 Less: Regulated Purchased Water expense* 100 110 122 122 133 Other revenue reductions for the amortization of excess accumulated deferred income taxes Plus: 149 (7) 153 (104) 154 (89) Freedom Industries chemical spill in West Virginia Estimated impact of weather Adjusted pro forma operating revenues-Regulated Businesses (b) Adjusted O&M efficiency ratio-Regulated Businesses (a)/(b) 1 $2,185 (47) $2,407 17 $2,570 $2,749 $2,851 $3,113 $3,335 $3,440 44.2% 40.7% 36.7% 34.9% 35.6% 34.3% 34.1% 33.7% Adjusted operations and maintenance expense - Regulated Businesses Less: $966 $980 $943 $959 Impact of adoption of ASU 2017-07** 39 (8) Adjusted operations and maintenance expense - Regulated Businesses (c) $966 $941 $951 12 $947 Adjusted operating revenues-Regulated Businesses $2,186 $2,407 $2,570 $2,749 Less pro forma adjustment: Pro forma adjustment for impact of the TCJA*** 89 Adjusted pro forma operating revenues-Regulated Businesses (d) $2,097 112 $2,294 137 $2,433 161 $2,588 Calculation assumes purchased water revenues approximate purchased water expenses ** Includes the impact of the Company's adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit, on January 1, 2018 *** Calculation of Estimated tax reform = Revenue Requirement with new Effective Tax Rate (taxes grossed up) Revenue Requirement with old Effective Tax Rate Adjusted O&M efficiency ratio-Regulated Businesses (c)/(d) 46.1% 41.0% 39.1% 36.6% 40#41American Water's GHG Emissions Profile Providing Services to 14M People with a Light GHG Footprint AMERICAN WATER American Water Co. A 83M Co. B 78M Stationary Scope 1: Direct Emissions Scope 2: Co. C 57M Fleet Vehicles 76,000 MT Co. D Refrigerants 43M Co. E 40M Purchased Power from Electric 459,000 MT Co. F 36M Indirect Emissions Providers Co. G 35M 2021 Scope 1 and 2 Subtotal First Time Disclosure 535,000 MT Co. H 28M Co. I 26M Co. J 25M Purchased Goods and Services Scope 3 (2021): Co. K 22M Capital Goods Up and Down 506,000 MT 1 Value Chain • Fuel & Energy-Related Activities Business Travel Co. L 17M Co. M 11M 1 Represents initial estimate based upon work with third party consultant, including identification of significant scope 3 categories Co. N 7M Co. O 5M Co. P 5M 20% Category 1: Co. Q 4M AWK emissions are only 0.1% of the total emissions generated by the top 20 utilities* Purchased goods and services Co. R 2M Scope 2 44% 49% Scope 3 Category 2: Co. S 0.7M Capital goods AWK 0.5M 49% Category 3: 31% Fuel & energy-related activities Scope 1:7% Category 6: Business Travel (<1% of Scope 3) ■2021 Scope 1 and Scope 2 MT CO2e (Rounded) * Chart represents emissions for the top 20 U.S. utilities by market cap, sorted by emissions ESG ESG™ at AWK 41#42Science-Based Goals for Scope 1 and 2 GHG Emissions Reductions - Aligned with Paris Agreement • • AMERICAN WATER Medium-term: By 2035, reduce absolute Scope 1 and 2 emissions by 50% (2020 baseline¹) Long-term: Achieve Net Zero Scope 1 and 2 emissions by 2050 Medium- and long-term goals are science-based and aligned with the Paris Agreement Complements existing short-term target of reducing absolute Scope 1 and 2 emissions by 40% by 2025 (2007 baseline) Our focus: invest to improve sustainability while prioritizing customer affordability, resiliency & environmental justice American Water's Path to GHG Emissions Reduction in 2035 +6% Customer Growth 1 & Increased Energy Use ~$150M-$300M Total Capital Investment (40-45%) Greening of Electric Grid 2 (5-7%) Renewable Energy (5-7%) Water Use & Efficiency (3-5%) Pumping & Operational (1 -3%) Fleet & Building Efficiency Efficiency 854,000 ■Scope 2 Emissions MT CO2e (Rounded) Scope 1 Emissions MT CO2e (Rounded) 545,000 790,000 481,000 273,000 64.000 2007 64.000 2020 2035 Target 2050 Target 1 Includes organic growth; annual adjustments to baseline will occur to incorporate growth through acquisitions 2 Assumes States' renewable portfolio standards will be achieved and power providers will fulfill stated carbon transition plans 42#43Investor Relations Contacts Aaron Musgrave, CPA Vice President, Investor Relations [email protected] AMERICAN WATER Jack Quinn, CPA Senior Manager, Investor Relations [email protected] Janelle McNally Senior Manager, Investor Relations & ESG [email protected] Kelley Uyeda Analyst, Investor Relations & ESG [email protected] Upcoming Events Q3 2023 Earnings Call EEI Financial Conference November 2, 2023 (projected) November 12-14, 2023 43