TEXT-S&P release on American Water Works

(The following statement was released by the rating agency)

Jan 29 - -Standard & Poor's Ratings Services said today that its 'A-' corporate credit rating on water and wastewater utility company American Water Works Co (AWK.N). Inc. (AWW) and its funding subsidiary, American Water Capital Corp. (AWCC) will remain on CreditWatch with negative implications.

Standard & Poor's placed the ratings on CreditWatch on Nov. 15, 2007, after parent RWE AG (A+/Negative/A-1) postponed AWW's equity offering. The reaffirmation of the CreditWatch listing follows recent statements by RWE's management that the AWW spin-off could still be delayed beyond April and possibly occur in late 2008.

As of Sept. 30, 2007, AWW's pro-forma total debt, including capitalized operating leases and tax-effected pension and postretirement obligations, was $5.7 billion. The ratings on the Voorhees, N.J.-based AWW reflect our assessment of the company's stand-alone credit quality based on its proposed post-IPO business plan, which includes improvements in the utility's financial profile above current levels.

AWW has received all regulatory approvals necessary for its divestiture from RWE AG. The ratings are also based on our expectation of regulatory support to fund the company's sizable capital-spending requirements through rate cases or supportive policies, such as infrastructure surcharges, forward-looking test years, and single tariff pricing.

"We still believe the postponement of the IPO distracts AWW's management and could stall necessary improvements to the company's financial profile, which depends on the successful execution of a number of rate cases across several states," said Standard & Poor's credit analyst Kenneth L. Farer.

"Additional delays to the IPO or AWW's inability to achieve improved financial performance in 2008 is likely to result in a downgrade," he continued.