The Water Industry

Our country’s public water systems provide water to a vast majority of Americans. Local governments traditionally have owned and operated public water systems, but in recent years an increasing number of municipalities have elected to sell or outsource their water operations to private companies.

The United States water industry has two main segments: utilities, which involve supplying services to customers, and general services, which involve providing water and wastewater related services to utilities and other consumers on a fee-for-service contract basis.

Utility Segment:
The utility segment includes municipal systems, which are owned and operated by local governments, and investor-owned systems. American Water’s nineteen state subsidiaries are examples of investor-owned utilities. Government-owned systems make up the vast majority of the United States water and wastewater utility segment, accounting for approximately 84 percent of all community water systems and approximately 98 percent of all community wastewater systems.

The utility segment of the water industry is highly fragmented, with approximately 53,000 community water systems and approximately 16,000 community wastewater facilities (according to the United States Environmental Protection Agency, or EPA). There are a few large water utilities, and of these, American Water is the largest investor-owned water and wastewater utility company in the United States. Our subsidiaries that provide water and wastewater services to customers are generally subject to economic regulation by the state PUCs in the states in which they operate. The federal government and the states also regulate environmental, health and safety and water quality matters

General Services:
General services encompasses those services surrounding the supply of water and wastewater, including engineering, consulting and sales of water infrastructure and distribution products. These services are provided to water and wastewater utilities and other consumers on a fee-for-service contract basis and are not subject to economic regulation.