#1AMERICAN WATER AMERICAN WATER Investor Presentation May 2021#2Forward-Looking Statements Safe Harbor 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, including uncertainties, risks and other factors associated with the current novel coronavirus (COVID-19) pandemic, are discussed in the Appendix to this presentation, and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the SEC on May 3, 2021. 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. AMERICAN WATER 2#3AMERICAN WATER Investment Thesis 3#4Our Business at a Glance Regulated Business as of December 31, 2020 53,000+ miles of pipe 609 water treatment plants 150 wastewater facilities 1,100 wells 75 dams Homeowner Services ~3 million contracts serving ~1.5 million customers Military Services Group 17 installations in current footprint Regulated Operations Regulated Operations & Homeowner Services AMERICAN WATER Homeowner Services Military Services Group 4#5Our Compelling Story AMERICAN WATER 2021-2025 Plan 7-10% EPS CAGR range Market-Based Businesses Regulated Regulated Acquisitions Investment CAPEX ~1% 1.5-2.5% 5-7% *Anchored off 2020 EPS 5#6Increase in Regulated Investment of $1.3 Billion Over the Next 5 Years - 2021 2025 Average Regulated Capital Expenditures by Purpose Capital Plan ($ in billions) 2021 - 2030 $22 - $25 4% 7% 8% Infrastructure Renewal $3 - $4 Regulated Acquisitions Operational Efficiency, 2021-2025 Technology & Innovation $10.3 - $10.5 2021 8% Water Quality $1.9 $1.4 - $1.6 Resiliency 6% 67% $0.3 System Expansion $19 - $21 Regulated System Investments Other $1.6 $8.9 AMERICAN WATER 6#7Managing Customer Bill Impact with a Disciplined Focus on Operating Costs Regulated O&M Efficiency Ratio* AMERICAN WATER 46.1% 41.0% 39.1% 36.6% 35.6% 34.5% 34.1% 30.4% ** 2010 2012 2014 2016 2018 LTM 3/31/2020 LTM 3/31/2021 2025 Target Added 327,000** customer connections since 2010 Adjusted O&M Expenses from 2010 to LTM 2021 increased only 1.1% CAGR* * Non-GAAP Measure - See appendix for reconciliation. 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 *** Includes organic customer connections, acquisitions and closed dispositions 7#8State Legislation Enables Growth Fair Market Value 11 Consolidated Tariffs 12 12 Water Quality Accountability Legislation CA MO CA IA IA NJ IL IN NJ IL NY KY MD IN IN PA MO NJ MO KY VA PA WV MD WV VA AMERICAN WATER 3 8#9Timely Recovery of Revenues, Expense, and Investment Mechanisms 17 New Regulatory Mechanisms Across Our Footprint Since 2010 3 2 As of 2010 As of 3/31/2021 7 7 7 100 6 9 6 11 7 12 Revenue Stability Mechanisms Utility Plant Recovery Mechanisms Future Test Years Expense Mechanisms Infrastructure Replacement Surcharges CA KY CA PA CA HI IL F IL TN ΙΑ NY KY VA IL WAN CA NY IA NJ WV NY IL PA IL NY PA MD TN IN PA TN MO VA KY TN NY IN VA NJ MO VA JANNY Consolidated Tariffs CA MD VA IA MO WV NJ IN NY KY PA AMERICAN WATER 9#10Market-Based Businesses Provide Strategic Value Military Services Group 17 installations in current footprint Opportunity for infrastructure upgrades on existing bases Homeowner Services ~3 million protection plan contracts serving ~1.5 million customers Over 40 different partnerships with municipal water, gas and electric utilities BENEFITS Capital light Enhances customer satisfaction Positive branding Builds relationships Cash flow positive Leverage core competencies AMERICAN WATER 10#11Balance Sheet Strength AWK Long-Term Issuer Rating S&P Global Moody's A Baa1 (stable) (stable) Consolidated Debt Maturity Profile 5 years as of December 31, 2020 $597 $329 $474 $356 $14 2021 AMERICAN WATER Debt to Total Capital* 2020 ** 62% 5-year Plan 2025 59-60% Liquidity Available as of year-end *Includes both long-term and short-term debt **Excludes $500 million term loan $1,935 $547 $1,120 $20 Cash $1,388 $1,100 Revolving Credit Facility ($2.25B capacity) 2022 2023 2024 2025 2020 2025 (Projected) 11#12Superior Dividend Growth Dividend Growth (Calendar Basis) AWK 5-Year Dividend Growth Significantly Outperforms DJUA & PHLX Utility Indexes 5-Year Dividend CAGR (2016-2021E**) $2.36 $2.15 10.0% $1.96 $1.78 $1.62 $1.47 5.6% 5.1% 2016 2017 2018 2019 2020 2021E* AWK DJUA Median PHLX Median AMERICAN WATER * Future dividends are subject to approval of the American Water Board of Directors Source: Factset as of 4/28/21; 2021 consensus estimate ** 12#13AMERICAN WATER Our ESG Goals 13#14What ESG Means at American Water Stakeholder Engagement Workforce + Activists/ Advocacy Groups Investors Industry Associations The Journey ESG Customers engagement of ESG Board of Directors Infrastructure Environmental Stewardship AMERICAN WATER Regulatory Agencies/ State Utility Commissions Suppliers • Employees Customers S Communities 14#15How We Work H5 Inclusion & Diversity 59% Of Transfers/Promotions were minority, female, veteran or disabled employees Diversity is our STRENGTH Supplier Diversity 27.6% 2021 Goal: Achieve diverse supplier/small business spend, of Tier 1 & 2 suppliers Communities are Better because we are there > Safety 67% Reduction in workplace injuries since 2015 Journey to ZERO injuries People >100k HRS Safety training completed by employees Learning through Best Practices AMERICAN WATER Note: Statistics as of 12/31/20 15#16Environmental Goals Energy & Emissions* Reduce absolute scope 1 and scope 2 greenhouse gas emissions by more than 40% by 2025 from a 2007 baseline Water Use & Efficiency By 2035, meet customer needs while saving 15% in water delivered per customer compared to a 2015 baseline Climate Variability & Water Supply Resilience By 2030, increase our water system resiliency to respond to more extreme events by increasing URI** weighted average by 10% from 2020 baseline. AMERICAN WATER *Clarification of existing goal ** Utility Resilience Index 16#17Water Use & Efficiency Goal By 2035, American Water commits to meet customer needs while saving 15% in water delivered per customer compared to a 2015 baseline 2015 2020 4.3% reduction gained since 2015 區 4.3% Reduction 3 to 5 % Continue and Since 2015 AMERICAN WATER Expand Current Programs 2 to 4% Innovation and New Technology 00000 2035 6 to 8% 區 15% National Trends Toward Efficient Appliances and Fixtures Reduction by 2035 BENEFITS Environment Energy Savings Avoided Capital Reduce Non-Revenue Water Lower Cost to Customers 17#18Climate Variability & Water Supply Resilience Goal By 2030, increase our water system resiliency to respond to more extreme events by increasing URI* weighted average by 10% from 2020 baseline BENEFITS Availability and reliability of service Robust, comprehensive emergency planning Response to extreme events Customer, employee and public safety Physical, cyber and fiscal security Workforce resiliency AMERICAN WATER *Utility Resilience Index 18#19Climate Variability & Water Supply Resilience Goal URI assesses a utility's ability to absorb and cope with an incident and return to normal operations as quickly as possible. H People Power Asset Resiliency Utility Resilience Resilient Systems (URI) Improved Emergency Plans Enhanced Capital Investment Employee Training Resiliency (URI) Community Resilience + STRATEGY AMERICAN WATER Improvement opportunities Uniform approach to training Quicker and efficient return to normal operations Holistic approach to resiliency. 19#201Q 2021 Overview AMERICAN WATER 20 20#21First Quarter 2021 EPS Detail by Business $0.68 0.19 (0.08) (0.05) (0.03) (0.02) Regulated $0.06 MBB ($0.03) Other $0.02 0.04 $0.73 Mar QTD 2020 Actual Revenue O&M/Other Depreciation HOS Interest, net Aggregate of unfavorable items in 2020 Mar QTD 2021 Actual AMERICAN WATER Note: Results for Q1 2020 & Q1 2021 both included a $0.01 per share benefit from depreciation not recorded as required by assets held for sale accounting 21#22Regulated Business Update Indiana House Enrolled Act 1287 . • Creates a mechanism that reduces the Legislative upfront cost to new customers to extend service to underserved areas . Effective July 1, 2021 House Enrolled Act 349 • Establishes a tax rider based upon a change in state or federal income tax law • Requires the Indiana Finance Authority to prioritize loans that secure long-term benefits over shorter term projects • Effective April 26, 2021 Kentucky House Bill 465 Allows for acquisition price above net book value when certain criteria are met • Establishes timeline of 60 to 150 days for PSC decision Effective June 30, 2021 Biden Administration Build Back Better Plan • Legislation introduced that highlights need for investment in water and wastewater infrastructure • Customers benefit from low-cost state revolving fund financing AMERICAN WATER 222#23Regulated Business Update Completed Rate Cases PENNSYLVANIA AMERICAN WATER . Effective as of January 28, 2021 • Additional authorized revenues of $90 million over two steps (2021 and 2022), excluding reduction for tax savings passed back to customers as a result of TCJA •ROE of 9.90%* •Capital Investment of $1.64 billion from 2019 through 2022 IOWA Pending Rate Cases AMERICAN WATER . . Rate case filed August 28, 2020 •Capital Investment of $87 million •10.5% ROE requested MISSOURI AMERICAN WATER • Effective as of May 28, 2021 •Additional authorized revenues of $22 million, excluding reduction for tax savings passed back to customers as a result of TCJA •ROE of 9.55%* • Capital Investment of $620 million since the end of 2017 WEST VIRGINIA AMERICAN WATER CALIFORNIA AMERICAN WATER Rate case filed April 30, 2021 •Capital Investment of $252 million •10.5% ROE requested Rate case filed July 1, 2019 • Capital Investment of $197 million • ROE set in separate Cost of Capital Decision • Rates covering 2021 through 2023 AMERICAN WATER * The ROE is the Company's view of the ROE allowed in the case as the ROE was not disclosed in the Order or the applicable settlement agreement 23#24Rate Filings Summary ($ in millions) Rate Filings Completed* Effective since January 1, 2021 $92 $31 $123 Rate Cases (Step Increases) Infrastructure Charges Total AMERICAN WATER Requested Revenue in Pending Base Rate Proceedings $61 Rate Cases * Annualized Revenue Increase for Rates Effective Since January 1, 2021; excludes a reduction in revenues from tax savings passed back to customers as a result of the Tax Cuts and Jobs Act; includes $22 million authorized revenues from Missouri-American's latest general rate case that will be effective May 28, 2021 24#25Acquisition of City of York, Pa. Wastewater System Ⓒ City of York, PA Wastewater Largest acquisition in Pennsylvania American Water History Executed under Act 12 of 2016 fair market value legislation $235 million purchase price 45,000 equivalent customer connections Strategic Benefits Acquisition of customers near existing water footprint allows Pennsylvania American Water to achieve operating efficiencies Acquisition further increases scale, demonstrating American Water as the preferred partner for water and wastewater acquisitions Size of PAWC also helps minimize future rate increases due to the benefits of Act 11 of 2012 AMERICAN WATER GE This is a new day for York, one filled with an unwavering optimism as our residents and businesses can finally breathe a sigh of relief for the first time in decades. -York Mayor Michael Helfrich " 25#26Regulated Acquisitions Update ** Egg Harbor City, NJ Water & Wastewater <<<< |||||| 图 Under Agreement as of May 1, 2021 State Number of Systems Total Number of Customer Connections First sale being executed through New Jersey's Water Infrastructure Protection Act (WIPA) California 6,200 Illinois 4 2,400 Indiana 3 4,200 Opportunities Totaling ≈1,230,000 Missouri 8 10,500 Customer Connections $21.8 million purchase price New Jersey 2 3,000 Pennsylvania 57,800 3,000 customer connections Virginia 1 900 West Virginia 2 1,000 Total 32 86,000 AMERICAN WATER 26#27AMERICAN WATER Appendix 27#28Forward-Looking Statements Statements made, referred to or relied upon in this presentation, including, without limitation, with respect to: earnings per share guidance; dividend growth guidance; the timing and outcome of pending or future acquisition activity; our future financial performance, liquidity and cash flows; our ability to finance our current operations, capital expenditures and growth initiatives by accessing the debt and equity capital markets; the impacts to us attributable to the current pandemic health event resulting from the novel coronavirus (COVID-19); the amount and allocation of future capital investments and expenditures; estimated revenues, regulatory recovery and other decisions in general rate cases and other proceedings; estimates regarding our projected rate base, growth, results of operations and financial condition; our projected regulated adjusted operation and maintenance efficiency ratio; growth and portfolio optimization strategies, including with respect to the announced sale of our New York subsidiary and the amount of proceeds or gain or loss to be recognized therefrom; trends in the industries in which we operate, including macro trends with respect to our efforts related to customer, technology and work execution; the outcome and impact on us of governmental and regulatory investigations and proceedings and related potential fines, penalties and other sanctions; our ability to execute our business and operational strategy; and regulatory, legislative, tax policy or legal developments, 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," "likely", "uncertain", "outlook," "future," "pending," "goal," "objective," "potential," "continue," "seek to," "may," "can," "will," "should" and "could" or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on our 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 and assumptions, known and unknown risks, uncertainties and other factors. 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 our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on February 24, 2021, and subsequent filings with the SEC, and because of factors including, without limitation: the decisions of governmental and regulatory bodies and the timeliness and outcome of regulatory commissions' and other authorities' actions; changes in customer demand for, and patterns of use of, water; limitations on the availability of our water supplies or sources of water, or restrictions on its use thereof; a loss of one or more large industrial or commercial customers; changes in laws, governmental regulations and policies; impacts resulting from U.S., state and local elections and changes in executive administrations; 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; risks associated with our aging infrastructure and our ability to appropriately improve the resiliency of, or maintain and replace, current or future infrastructure, systems and assets; exposure or infiltration of our technology and critical infrastructure systems through physical or cyber attacks or other means; our ability to obtain permits and other approvals for projects and construction of various water and wastewater facilities; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations; the intentional or unintentional actions of a third party, including contamination of our water supplies or the water provided to our customers; our ability to obtain adequate and cost-effective supplies of equipment, chemicals, electricity, fuel, water and other raw materials; our ability to successfully meet growth projections for our businesses and capitalize on growth opportunities; our ability to acquire, close and successfully integrate regulated operations and market-based businesses, enter into contracts and other agreements with, or otherwise obtain, new customers in our market-based businesses, and realize anticipated benefits and synergies from new acquisitions; risks and uncertainties associated with contracting with the U.S. government; cost overruns relating to our operations; our ability to successfully develop and implement new technologies; our ability to maintain safe work sites; our exposure to liabilities related to environmental laws and similar matters; changes in general economic, political, business and financial market conditions, including with respect to the COVID-19 pandemic; access to sufficient debt and/or equity capital on satisfactory terms and when and as needed to support operations and capital expenditures; fluctuations in interest rates; our ability to comply with negative and affirmative covenants in our current or future indebtedness; the issuance of new or modified credit ratings or outlooks or other communications by credit rating agencies on us or on our current or future debt; our ability to issue, repay or redeem debt, pay dividends or make distributions; fluctuations in the value of benefit plan assets and liabilities; changes in federal or state general, income and other tax laws, including future significant tax legislation, the availability of or our compliance with the terms of applicable tax credits and tax abatement programs, and our ability to utilize our U.S. federal and state income tax net operating loss carryforwards; the use by municipalities of the power of eminent domain or other authority or the assertion of similar rights by private landowners; any difficulty or inability for us to obtain insurance; the incurrence of impairment charges related to goodwill or other assets; labor actions; our ability to attract and retain qualified employees; civil disturbances, unrest or terrorist threats or acts; and other factors as may be set forth in the Company's SEC filings. These and other forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors and cautionary statements included in our annual, quarterly and other SEC filings, and readers should refer to such risks, uncertainties, risk factors and statements in evaluating such forward-looking statements. Any forward-looking statements speak only as of the date this presentation was first used or given. We do not have and do not 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 us to predict all such factors. Furthermore, it may not be possible to assess the impact of any such factor on our 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. AMERICAN WATER 28#29Non-GAAP Financial Information 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 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. AMERICAN WATER 29#30Inclusion & Diversity AMERICAN WATER 2020 Inclusion & Diversity Report ake AMERICAN WATER Make mp C Make ak TAN KEES Make pact Make Impact Lov Mak Som Make ak Beautifully Different Celebrating Diversity Month: A Conversation with Mr. Earvin "Magic" Johnson Walter Lynch Earvin "Magic" Johnson AMERICAN WATER American Water Community Healing Discussion 30#312021 Closed Acquisitions* As of May 1, 2021 STATE Illinois NUMBER OF SYSTEMS WATER CUSTOMER CONNECTIONS 1 150 WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS 150 Missouri 3 50 300 350 West Virginia 1 400 400 Total 5 600 300 900 AMERICAN WATER *Customer Connections are rounded and may not sum 31#32Acquisitions* Under Agreement as of May 1, 2021 NUMBER OF WATER CUSTOMER STATE SYSTEMS CONNECTIONS WASTEWATER CUSTOMER CONNECTIONS TOTAL CUSTOMER CONNECTIONS California 4 Illinois 6,200 6,200 4 1,200 1,200 2,400 Indiana 3 4,100 100 4,200 Missouri 8 4,700 5,800 10,500 New Jersey 2 1,600 1,400 3,000 Pennsylvania 8 00 1,700 56,100 57,800 Virginia 1 900 900 West Virginia 2 1,000 1,000 Total 32 21,400 64,600 86,000 AMERICAN WATER *Customer Connections are rounded and may not sum 32#33Investment in Rate Base is the Foundation of Our Growth ($ in billions) ≈7-8%* Rate base CAGR expected through 2025 Estimated Rate Base** $15.2 $15.0 $13.7 $12.5 $11.7 As of 12/31/2017 As of 12/31/2018 As of 12/31/2019 As of 12/31/2020 As of 3/31/2021 Σε As of 3/31/2021 $20.3 Net Utility Plant Less Advances for Construction $0.3 CIAC Contributions in Aid of Construction $1.4 Net Deferred income taxes $3.4 Total Estimated Rate Base AMERICAN WATER *Anchored off 2020 **An approximation of rate base, which includes Net Utility Plant not yet included in rate base pending rate case filings/outcomes. Amounts may not sum due to rounding $5.1 $15.2 33#34Rates Effective Since... January 1, 2021 Rate Cases & Step Increases Date Effective Annualized Infrastructure Charges Revenue Increases Date Effective Annualized Revenue Increases Pennsylvania 1/28/21 Missouri 5/28/21 Sub-Total $70(a) 22(b) West Virginia (DSIC) 1/1/2021 $5 $92 Pennsylvania (DSIC) Tennessee (QIIP, EDI, SEC) 1/1/2021 8 1/1/2021 3 Illinois (QIP) Indiana (DSIC) 1/1/2021 7 3/17/2021 8 Sub-Total $31 Total $123 (a) The Company was authorized additional annualized revenues of $90 million, excluding a reduction in revenues for tax savings passed back to customers as a result of the TCJA, over two steps. The excess accumulated deferred income tax ("EADIT") reduction in revenues is $19.5 million. The overall increase, net of TCJA, is $70.5 million in revenues combined over two steps. The first step was effective 1/28/2021 in the amount of $70 million ($50.5 million including TCJA reductions) and the second step will be effective 1/1/2022 in the amount of $20.0 million. (b) The Company was authorized additional annualized revenues of $21.8 million, excluding a reduction in revenues for tax savings passed back to customers as a result of the Tax Cuts and Jobs Act. The excess accumulated deferred income tax ("EADIT") reduction in revenues is $25 million. AMERICAN WATER 34#35Pending Rate Case Filings Rate Cases Filed California Docket/Case Number Date Filed Requested Revenue Increase ROE Requested Rate Base Case No. A.19-07-004 7/1/2019 $26(a) $689 Iowa Case No. RPU-2020-0001 8/28/2020 3(b) 10.5% 145 West Virginia Case No. 21-0369-W-42T & 21-0370-S-42T 4/30/21 32(c) 10.5% 757 Total $61 $1,591 (a) On July 1, the company filed for a Test Year 2021 revenue requirement request of $26.0 million which excludes the escalation year and attrition year rate increases for 2022 and 2023 of $9.8 million and $10.8 million, respectively. The Company filed its 100-day update on October 11, 2019, requesting $27.3 million annualized incremental revenues for 2021, and increases of $9.5 million and $10.3 million in the escalation year of 2022 and the attrition year of 2023, respectively (b) The requested increase is $2.9 million, which excludes $1 million from the QIP (c) The Company has requested additional annualized revenues of $31.9 million, excluding a reduction in revenues for tax savings passed back to customers as a result of the Tax Cuts and Jobs Act ("TCJA") and infrastructure surcharges. The proposed excess accumulated deferred income tax ("EADIT") reduction in revenues is $0.9 million and the exclusion for infrastructure surcharges is $10.2 million. AMERICAN WATER 35#36Regulatory Information CALIFORNIA ILLINOIS INDIANA KENTUCKY MISSOURI $443,654 $1,703,170(b) Authorized Rate Base* $498,135 $883,386 $1,182,170 ROE 9.20% (a) 9.79% 9.80% 9.70% Equity 55.39% (a) 49.80% 53.41% (c) 48.90% Effective Date of Rate Case 1/1/2018(a) 1/1/2017 5/1/2020 6/28/2019 9.55%(e) 50.00% (d) 5/28/2021 NEW JERSEY NEW YORK PENNSYLVANIA VIRGINIA WEST VIRGINIA Authorized Rate Base* $3,573,450 $275,463 $3,976,579(b) $194,165 $652,900(g) ROE 9.60% 9.10% 9.90%(e) 9.30% (h) 9.75% Equity 54.56% 46.00% 55.15% (d) Effective Date of Rate Case 11/1/2020 6/1/2017 1/28/2021 40.75% (d) 11/6/2020(f) 48.40% (g) 2/25/2019 *Rate Base stated in $000s (a) On March 22, 2018, Decision 18-03-035 set the authorized cost of capital for 2018 through 2020. CAW has a separate Cost of Capital case which sets the rate of return outside of a general rate proceeding (b) The Rate Base 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 (c) 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 (d) 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 (e) 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 (f) Interim rates were effective April 1, 2016 and received final Order May 24, 2017 (8) The Rate Base and equity ratio is the Company's view of what was allowed in the case, as there were multiple versions of each disclosed by the parties in the settlement agreement (h) The ROE is the Company's view of the ROE allowed in the case, the ROE was not disclosed in the Order or the applicable settlement agreement, 9.6% is adopted for future earnings test and WWISC filings per the Order AMERICAN WATER 36#37Fair Market Value Type Legislation in American Water Footprint State California (1993) Legislation California Fair Market Value Legislation Eligibility Requirements Greater than 25 connections Fair Market Determination Highest price on date of valuation, a buyer would pay and seller would accept, so long as the negotiated price falls below the appraised value, unless sufficient justification exists to exceed appraised value Illinois Valuation of Water and Sewer Utilities 6,000 or fewer connections • Average of three appraisals (2013) Indiana Offered Utility Statute Less than 8,000 customers • (2015) Iowa (2018) 2018 House File 2307 - Act relating to the Sale or Acquisition of Certain Utilities Three appraisals are required; signed by two of the three constitutes a valid appraisal. FMV of $500,000 or more requires Greater of: the board approval (1) Average of two appraisals; (2) The depreciated value of the capital assets; (3) Amount to retire city's outstanding revenue and obligations • . Industry standard asset valuation methodologies (depreciated original cost, reproduction cost new less depreciation, etc.) Average of two-utility valuation expert appraisals. Kentucky (2021) Maryland (2018) Missouri (2010) Acquisition Adjustment Legislation Not specified Water and Sewage Disposal Companies - Acquisition Not Specified New Jersey (2015) Pennsylvania Fair Market Value Law - "MO (RSMO) 393.320" Water Infrastructure Protection Act Fewer than 8,000 customer connections • Appraisal signed by two of three appraisers. Population less than 270,000 • Purchase price is within the range of any appraisals Fair Market Value - Act 12 of 2016 Not Specified • Average of two-utility valuation expert appraisals (2016) Virginia (2020) West Virginia Utility Transfers Act: Water and Sewer Utilities; Asset Acquisitions Not Specified • Average of three qualified and impartial appraisals (2020) Water and Wastewater Investment and Infrastructure Improvement Act - WV SB 551 Not Specified Asset valuation methodologies: (depreciated original cost, or reproduction cost new less depreciation, or other industry standard utility asset valuation methods up to but excluding fair market value) AMERICAN WATER 37#38Reconciliation Table: Regulated Segment O&M Efficiency Ratio AMERICAN WATER Regulated Segment O&M Efficiency Ratio FY FY 2010 2012 FY 2014 FY 2016 FY 2018 LTM LTM 3/31/2020 3/31/2021 (A Non-GAAP Unaudited Number) ($ in millions) Total operations and maintenance expense $1,291 $1,330 $1,350 $1,504 $1,479 $1,562 $1,658 Less: Operations and maintenance expense - Market-Based Operations 257 256 289 372 362 386 404 Operations and maintenance expense - Other (61) (56) (51) (44) (42) (27) (26) Total operations and maintenance expense - Regulated Businesses Less: $1,095 $1,130 $1,112 $1,176 $1,159 $1,203 $1,280 Regulated purchased water expense 100 110 122 122 133 139 Allocation of non-operation and maintenance expenses 29 35 39 30 31 31 152 43 Impact of Freedom Industries activities - - 10 65 (20) Estimated impact of weather 5 (2) - Adjusted operations and maintenance expense - Regulated Businesses (a) $966 $980 $943 $959 $1,015 $1,033 $1,085 Total operating revenues $2,555 $2,854 $3,011 $3,302 $3,440 $3,640 $3,822 Less: Operating Revenues - Market-Based Operations Operating Revenues - Other Total pro forma operating revenues-Regulated Businesses 295 307 355 451 476 533 549 (26) (17) (18) (20) (20) (22) (17) $2,286 $2,564 $2,674 $2,871 $2,984 $3,129 $3,290 Less: Regulated Purchased Water expense* 100 110 122 122 133 139 Other revenue reductions for the amortization of excess accumulated deferred income tax Plus: 152 (46) Freedom Industries chemical spill in West Virginia Estimated impact of weather Adjusted pro forma operating revenues-Regulated Businesses (b) $2,186 (47) $2,407 1 17 $2,570 $2,749 $2,851 $2,990 $3,184 Adjusted O&M efficiency ratio-Regulated Businesses (a)/(b) 44.2% 40.7% 36.7% 34.9% 35.6% 34.5% 34.1% Adjusted operations and maintenance expense - Regulated Businesses Less: $966 $980 $943 $959 Impact of adoption of ASU 2017-07** Adjusted operations and maintenance expense - Regulated Businesses (c) $966 39 $941 (8) $951 12 $947 Adjusted operating revenues-Regulated Businesses Less pro forma adjustment: $2,186 $2,407 $2,570 $2,749 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% 38#39Reconciliation Table: Adjusted Consolidated Return on Equity AMERICAN WATER LTM Adjusted Consolidated Return on Equity March 31, 2020 LTM March 31, 2021 Net Income Adjustments: Keystone Sale $632 $718 $44 $0 Tax Impact for items above ($9) $0 Adjusted Net Income from Continuing Operations (a) $667 $718 Shareholders' equity Adjustments: Keystone Sale Tax Impact for items above $6,243 $6,583 $44 $0 ($9) $0 Adjusted Shareholders' Equity (b) $6,278 $6,583 Adjusted Consolidated Return on Equity (a/b) 10.6% 10.9% 39#40Military Services Group Currently Serving 17 Military Installations Contract Contract Y 68 Additional Installation Opportunities State Years Remaining As of 9/30/2020 ≤ 5 × = S P Q LA TX OK 33 33 AL 34 Marine 13 VA 37 37 38 38 Air Force 23 Fort Sill Fort Leavenworth Fort Rucker Fort AP Hill Scott AFB Fort Hood Fort Polk Fort Belvoir Fort Meade Hill AFB Picatinny Arsenal Vandenberg AFB VA 39 MD 40 UT 44 NJ 44 CA 46 Wright-Patterson AFB OH 48 Fort Leonard Wood MO 49 Joint Base San Antonio TX 50 U.S. Military Academy at West Point, New York NY 50 Joint Base Lewis-McChord WA 50 AMERICAN WATER Navy 20 Army 12 40#41Investor Relations Contacts Ed Vallejo Vice President, Investor Relations [email protected] AMERICAN WATER Michael Tavani, CFA Senior Manager, Investor Relations [email protected] Abbey Barksdale Senior Manager, Investor Relations & ESG [email protected] 41