Ladies and gentlemen, good morning and welcome to American Water's 2008 Fourth Quarter and Year End Earnings Conference Call. As a reminder, this call is being recorded and also being webcast with an accompanying slide presentation through the company’s website www.amwater.com. Following the earnings call, an audio archive of the call will be available at 11:00 AM Eastern Time today, by dialing 800-475-6701 in the U.S. and 320-365-3844 for international callers. The pass code for replay participants is 982411. The call replay and online archive of the webcast are scheduled to be available through March 6, 2009, by accessing the Investor Relations page of the company’s website located at www.amwater.com. At this time, all participants have been placed in a listen-only mode. Following management’s prepared remarks, we will then open the call for questions. (Operator Instructions). Today’s call is scheduled for one hour including questions and answers. I would now like to introduce your host for today’s call, Ed Vallejo, Vice President of Investor Relations. Mr. Vallejo, you may begin.

Thank you. Good morning everyone and welcome to American Water’s fourth quarter and year end earnings conference call. With me on [warranties] are Don Correll, our President and Chief Executive Officer; and Ellen Wolf, our Senior Vice President and Chief Financial Officer. We released our earnings announcement last night and we anticipate filing our 10-K shortly. If you did not receive a copy of the earnings release, you can find it by visiting our website at www.amwater.com. As usual, we will keep our call to about an hour. At the end of our prepared remarks, we will have time for questions. Before we begin, I would like to remind everyone that in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, we are advising you that certain matters to be discussed by members of management during this call may constitute forward-looking statements. Such statements are subject to numerous risks, uncertainties and other factors that may cause the actual performance of American Water to be materially different from the performance indicated or implied by such statements. Such risk factors are set forth in company’s SEC filings. I would like to turn the call over to Don Correll.

Thank you, Ed, and good morning everyone. I want to thank everyone for joining us today and for your interest in American Water. It’s with great pleasure that I am able to comment on our fourth quarter and our year-end results. This time last year, we still not had our initial public offering, but what a difference a year makes. American Water has been a public company since April 2008. We’ve had many accomplishments that the entire company can point to with pride for this past year. But before I comment on the highlights of our fourth quarter and year-end results, I think it’s fair to say that even at the time of American Water’s initial public offering in April, few would have predicted the economic downturn that would soon follow. Having said that, I think that our results for the year show that despite all of the external conditions. American Water strategy is proved to be a solid one that has allowed our business to weather these times and stay the course to provide our customers with high quality drinking water and reliable water and wastewater services. These strategies include investing in our infrastructure, earning an appropriate rate of return and growing through acquisitions and public private partnerships. Although, the country has seen credit and investment scarcity, American Water managed through the credit crunch that reached its peak in the fall of 2008 by accessing our $840 million unsecured back-up credit lines without a problem. This past November, the company successfully completed a debt offering of $75 million aggregate principle amount, 10% Senior Monthly Notes. We closed a similar debt offering this month of $75 million aggregate principal amount of 8.25% senior monthly notes. Despite the harsh stock market conditions as I mentioned in the last earnings call, the…

Good morning and thank you very much Don. Good morning everyone. I would also like to thank each of you for your continued interest in American Water as we approach our one-year anniversary of our return to being a public company. As Don mentioned, our results for the year and the quarter ended December 31, 2008 were driven by continued implementation of our core strategies of prudently investing in our infrastructure applying for and receiving appropriate rates of return on that investment, while also making continuous improvements to the service provided to our customers. Through a disciplined approach to executing our strategies, we delivered solid results in 2008 despite the unusually wet weather experienced in the Midwest State as well as increases in certain employee related expenses. While the state of the economy has had some impact on our industrial sales and other aspects of our business, we continue to see growth in revenues and net income to continued focus on the rate recovery aspects of our strategy. Also as we will discuss shortly our results for the quarter and the year also reflect to decline in those expenses that were necessary to enable our transition to a public company. For 2008, American Water reported a net loss of $562.4 million or $3.52 per common share, compared to a net loss of $342.8 million or $2.14 per share common share in 2007. Included in both '07 and '08, our goodwill impairment charges of $501.5 million and $738.5 million respectively. After adjusting for goodwill impairment charges in '08 and '07, net income for the year was $176.1 million versus the $158.7 million in '07, and earnings per common share was $1.10 and $0.99 respectively, resulting in an approximate 11% increase in both net income and earnings per share year-over-year. For the…

Thank you, Ellen. In closing and before we move to the Q&A I want to repeat some of American Water's attributes that we discussed on this call. We demonstrated our leadership through the third-party recognition received and the awards we earned throughout the year. We grew our revenues to our commitment to invest in our infrastructure and to seek an appropriate rate of return. The increased in revenues also reflects our progress in the regulatory process contributing to our favorable risk profile, and our management led the company through one of year’s largest IPOs and one of the largest utility IPOs in U.S. history, all while, we implemented our core strategies. 2008 has been a strong year where we met our stated earnings goals and while acknowledging the challenge that our company in nation face, we remain committed to achieving the goal that we laid out at the time of our IPO growing our earnings per share in the 7 to 10% range over the long-term. With that I thank you for your continued interest in American Water. And I will turn the call back to the operator for our question-and-answer period.

(Operator Instructions). And our first question is coming from the line of Maria Karahalis from Goldman Sachs. Please go ahead. Maria Karahalis – Goldman Sachs:

Ellen you take that.

Maria Karahalis – Goldman Sachs: Okay. Thank you, Don.

Thank you. Maria Karahalis – Goldman Sachs: Thanks, Ellen.

Thank you. Our next question will come from the line of Debra Coy from Janney. Please go ahead. Debra G. Coy – Janney Montgomery Scott, LLC: Yes, thanks. Good morning all.

Good morning.

Good morning Debra G. Coy – Janney Montgomery Scott, LLC: Two questions as well. One on the consumption decline Ellen thanks for the detail on the various customers impacted. But can you break down on a relative percentage basis. How of it you think was weather related versus how much may have been conservation or economic related. And obviously the reason for my question is, if we assume normal weather always a difficult assumption, but if we could count on normal weather going forward, what would be the impact. How much of the decrease was, do you think was weather versus these other factors?

Yeah, Debra. It’s extremely hard to break that down into the consumption versus weather versus economic, namely because we – it’s hard to tell what’s driving and let’s we go knocking door to door. I think on the customer side, consumer side most of that is either weather related very little consumption related. As I mentioned earlier what we are starting to see more the economic impact is on the industrial side and again particularly in the Midwest area, which is connected to the auto industry, very heavily connected to the auto industry. And so I would think on our industrial side as where you may see more of the economic impact. And then on the consumer side I think some of that is consumption, but the majority of it is weather. Debra G. Coy – Janney Montgomery Scott, LLC: So that we would expect to see the industrial we could expect to see that continue through 2009 most likely?

I guess it will depend on some cases what happens in other industrial sectors for example, I can give you one example in January, some of our industrial customers were closed down two days a month. They are back being open through February. So, it really does depend on what's happening in the related industries. Debra G. Coy – Janney Montgomery Scott, LLC: Okay. That’s helpful. And then secondly on the capital spending side. Don you mentioned that you are on track for the 4 – 4.5 billion over the five years, $1 billion of that obviously in the first year of the five. Can you talk a little bit more about your CapEx plans for 2009? And perhaps in some of the individual states such as Governor Corzine asking for utilities to the step-up CapEx kind of there is on economic stimulus. How are you thinking about CapEx for this year? Given the uncertainties in the debt and equity markets, particular the equity market?

Thank you for the questions. Its obviously very valid question given these economic times and that something that we looked at very carefully the fall of last year, because while we were committed to the anywhere from 800 million to a $1 billion range, which is now we get to our 4 to 4.5 over the next five years. You can only spend it if you access the capital markets since we do need to we don’t generate all of our funds from internally generated operations we need to have access whether it’s debt or equity. And we like every other business last fall took a hard look at what might we need to do under a variety of contingency plans. We are still prepared to be in the $800 million to a $1 billion range going forward. We have to adjust a little bit based upon the some of the activities last fall. So we’re probably at the lower end of that for 2009, but we still have confidence borne out by our recent ability to raise some debt to be able to continue to fund this, at this level going forward. We certainly want to be able to access both the debt and the equity markets going forward, but we are looking to spend at that level for 2009. Frankly, we’ve always invested in, to use your example in New Jersey and Governor Corzine. I know he has had some initiatives for the energy companies and we are doing, we have always invested $100 million give or take a little bit in New Jersey and continue to plan to do that. We have an application pending before the New Jersey Board of Public Utilities now to implement something similar to what we have in other states, where we would have a an infrastructure surcharge. And where we are encouraged that it’s getting some momentum now, and that will also support the continued investment in infrastructure in New Jersey as well as in other places. So we don’t see ourselves returning to the days of our industry where we were replacing our infrastructure on a 3 to 500 year replacement cycle. We think it is important to be doing it in accordance with the physical lives of the assets, which is more like a 100 years for some of the long-lived pipe and we’re committed to doing that throughout our systems. Debra Coy – Janney Montgomery Scott, LLC: Okay. That’s helpful. And then just one followup on that, Ellen you talked through the sources of capital for 2008. And I know, you can’t comment on the equity offering per se can you talk through the sources of capital for the 800 for ’09 assuming perhaps somewhere again in the 500 plus million operating cash flow range. Then I would leave you about a $300 million or so. What you still have left than that capacity versus what you need to raise on equity to meet that 800?

Yes. Without going through a specific numbers Debra, we will address our capital needs through as you mentioned operating cash flow, raising of debt and raising of incremental equity. So that as we told the market before, our goal is to be between 45% and 50% equity in our debt equity ratio. We will also be to the extent we qualified the looking for debt through the economic stimulus package and the items that Don had mentioned earlier to the extent we can access that we will also be looking to access that source of cash. Debra Coy – Janney Montgomery Scott, LLC: Thanks. And then just the last question. Just to follow up with Maria’s question on the pension expense. Can you just roughly characterize which half of the state allow the regulatory asset versus which have don’t, in other words is that your bigger operating states that allow that or smaller kind of how would we drop?

Its… Debra Coy – Janney Montgomery Scott, LLC: Customer base in…

It's about 50/50 Debra. Debra Coy – Janney Montgomery Scott, LLC: 50/50 on customer base not just number states…

That is correct. Debra Coy – Janney Montgomery Scott, LLC: Okay. Great, thank you.

Sure.

And next we will go to the line of Ryan Connors from Boenning & Scattergood. Please go ahead. Ryan M. Connors – Boenning & Scattergood, Inc.: Hi, good morning.

Good morning Ryan. Ryan M. Connors – Boenning & Scattergood, Inc.: I had a question for you on the issue of rate cases, we spend a lot of time talking to the municipal utilities to try to get an idea of which – what the key trends are in the industry and one of the things we are hearing is that a lot of the municipal utilities are trying not raise rates in this environment just given the economic times and the pressure on the consumer et cetera. So, my question is, to the extent that is the case does that make it tougher just politically for you all to try to sell your own rate cases and if so how do you see that impacting, the 100 million plus that you have pending and anything that’s filed in the near-term.

Ryan, if I could just also add, while we cannot predict the future. We can only take a look at the most recent decisions in both New Jersey and Missouri, where even though those were large increases, they were a continued recognition by the regulators that even in these times they need to encourage us to continue to put money into the infrastructure. And they do see a connection between that and the job that it creates. So, again we can only look at the past right now. Ryan M. Connors – Boenning & Scattergood, Inc.: Great, that’s helpful and then kind of staying on the same theme, one of the other things that we hear in our conversations with the municipal side, as many of them say that the costs, I have been stubbornly high for things like the basic materials, the hydrants, the valves et cetera that cost for those things have not come down as much as they may have expected given the steep declines in the underlying input cost, the commodity prices. So, I would be interested to hear what you are seeing there whether you are seeing those things not coming down also and if so how that impacts your outlook in terms of operating cost for '09?

In terms of the capital hydrants et cetera all of that goes into our capital budget and that’s included in our $4 billion to $4.5 billion in terms of commodity prices as I've said we have seen the drastic increase in chemicals, I think you as well as rest of us can see what's happening with fuel prices it was sort of hit a high mid summer and it has been coming down since, and we did not see much of an impact of that as I mentioned in the fourth quarter, what really drove our expenses in the fourth quarter were the chemical costs, which some of those still have continued to remain high. Ryan M. Connors – Boenning & Scattergood, Inc.: Okay. Great, thank you.

Thank you.

Next we’ll go the line of Tim Winter from Jesup & Lamont. Please go ahead. Timothy Winter – Jesup & Lamont: Good morning, Ellen and Don.

Good morning Tim.

Good morning Tim. Timothy Winter – Jesup & Lamont: Thanks for quantifying some of the customer segment. I was wondering if you could quantify the industrial revenue decline for the quarter and the year. And if there is any more color there, are there large industrial customers that have shutdown or is this a seasonal thing with trying to deplete inventory at year-end.

Sure. In terms of quantifying it, as I mentioned and Ed mentioned earlier, we will be filing our 10-K shortly. And I think at that point there is a lot more detail in there, that I would ask to you go through. It is difficult for us to quantify each and everyone in terms of dollars, because every state has a different industrial customer rate, but as I mentioned the Midwest seems to be the area right now. We’re not seeing any customers, a lot of customers closing up on the industrial, but what we did see they may close for a day or two, which they hadn’t done before. And we are seeing a couple of bankruptcies, but not significant that it would make a huge impact at this stage. Timothy Winter – Jesup & Lamont: Okay. And can you remind me where your California Americans subsidiaries in the implementation of the ram or the de-coupling? Did what were as we…

As you know we have a couple of rate cases outstanding right now, one is on the rate case for the overall return on equity, we have a couple that have been filed individual areas, and then finally we will be filing the one consolidated rate case, where I believe this will must like be a addressed in an another year. We do have it in one of our smaller subsidiaries out there and that is going through the process right now and... Timothy Winter – Jesup & Lamont: So for the most part you have not experienced a benefit of the de-coupling yet?

Not at this point, although we do have ram accounts on a [couple], where we have been able to start to see some benefit and that would be ’09 not in ’08. Timothy Winter – Jesup & Lamont: Okay. Thank you.

Thank you.

Thank you. Next we will go to the line of [Jonathan Reader] from Wachovia. Please go ahead. Jonathan Reader – Wachovia Securities: Good morning Ellen and Don.

Good morning, Jonathan.

Good morning. Jonathan Reader – Wachovia Securities: Two more questions, I have most of them have been asked, but is there any way you can quantify the increase in the 2009 pension expense, or just give us a rough ballpark as its still probably a bit of a working number?

It is very much a working number and again we have, I think if you would wait to take a look through the financials, the 10-K both the pension footnote as well as further disclosure in the liquidity section about or increase in cash contribution that will help you get there, again remember that some of our states are ERISA-type states. Jonathan Reader – Wachovia Securities: Okay. And then the last one, could you just talk about I guess what you're expecting as far as the weather normalized sales trends go in 2009. I mean, obviously 2008 we saw that deceleration as the year went on. Are you seeing, I guess a stabilization, at what point during the year might it kind of pickup, may be you can expand on that.

I could go to the consumption area, I think as you look through, but our S-1 and 10-K you will see that you we do expect and have seen continuously a decrease in consumption ranging from 0.6% to 1.5% and that’s a sort of ten year average as it goes down. So once you normalize for the weather, we do expect to continue to see that consumption decrease and that is also what we do try, but its part of the regulatory lag that you’ll see in our ROE between our net income and our authorized returns of let’s say 10% you’ll see a lag generally its related to this decrease in consumption as well as increases in expenses. So, we do expect to continue to see a decrease in consumption along those lines. Jonathan Reader – Wachovia Securities: Kind of the economic that I mean I know it’s hard to separate it out, but I'm trying to get at more just, through the economy not just the long-term I guess declining consumption trend?

And while I appreciate where you’re trying to get to I don’t think we could predict what’s going to happen. Jonathan Reader – Wachovia Securities: Okay, thank you.

Thanks.

This concludes the question and answers portion of the call. I would now like to turn the conference over to Don Correll for closing remarks.

Well, thank you all for joining our call and your continued support of American Water. This does conclude today's call. And if you have any more questions, please feel free to call our Investor Relations team directly. And I will turn it back to the operator now. Thank you again.

Thank you. This does conclude today conference call and webcast.