American Water Prices Common Stock Offerings.

RWE will complete its full divestiture if underwriters' exercise option

VOORHEES, N.J. -- American Water (NYSE: AWK) announced today an offering of 37.4 million shares of common stock priced at $21.63 per share. All the shares will be sold by the selling stockholder, a subsidiary of RWE AG, with proceeds going to RWE AG. American Water will not sell any shares and will not receive any proceeds.

RWE granted the underwriters a 30-day option to purchase up to 3.7 million additional shares. After the offering, assuming the full exercise of the underwriters' option, the selling stockholder will have sold all of its shares of American Water's common stock.

RWE acquired American Water in 2003 and announced its intention to fully divest of the company in 2005.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and Morgan Stanley & Co., Incorporated are acting as joint book-running managers in connection with the offering.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

An effective registration statement relating to these securities is on file with the U.S. Securities and Exchange Commission. A copy of the final prospectus and prospectus supplement may be obtained when they are available by contacting any of the following:

* BofA Merrill Lynch, 4 World Financial Center, New York, NY 10080, Attn: Preliminary Prospectus Department or email [e-mail].

* Credit Suisse Securities (USA) LLC, Attention: Prospectus Department, One Madison Avenue, New York, NY 10010, telephone [phone]

* Morgan Stanley & Co., Incorporated, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, email: [e-mail], telephone [phone].

You may also obtain the final prospectus and prospectus supplement when they are available on the U.S. Securities and Exchange Commission's website at http://www.sec.gov.

About American Water

Founded in 1886, American Water is the largest investor-owned U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 15 million people in 32 states and Ontario, Canada.