John Griffith, a longtime mergers & acquisitions leader in the utility space who assumed the role of CEO of Camden-based American Water in May, said he will aggressively continue the longtime mission and vision of what is the country’s largest publicly traded water and wastewater utility company.
That means:
- Making massive investments in the company’s more than 50,000 miles of pipes in 24 states (approximately $3.3 billion next year, and more than $40 billion in the next 10 years).
- Pursuing additional acquisitions around the country (the goal is approximately 20 a year).
- Aggressively working to remediate PFAS (“forever chemicals”) from the water supply (this should be a joint effort).
- Continuing to serve as a “Best Place to Work” — especially for veterans (you should see all the awards).
Griffith may want to consider one more goal: Helping the public and public officials understand three important things about his sector: Water is a heavily regulated utility (no different than gas or electric); it is one that is fragmented in far greater ways than any other; and it is one that is approaching a cost crisis due to decades of underfunding and general neglect.
Griffith, who came to American Water in 2022 as its chief financial officer and was promoted to president in 2024 before landing the top job upon the retirement of Susan Hardwick, said he’s looking forward to the challenge.
“I look at it as a chance to solve a lot of problems for a lot of people,” he said. “It’s a business that doesn’t get a lot of attention, but, from a problem-solving perspective and a societal perspective, as well as from a financial perspective, it’s a really interesting business — and a great place to be.”
Griffith recently sat down with BINJE for an hourlong conversation on all things water and wastewater treatment.
Here’s a look at the conversation, edited slightly for space and clarity.
BINJE: American Water already is the largest utility in the country, serving 14 million people in 1,700 communities (and military installations) in 24 states. Why the desire to grow — and what are the unique challenges in doing so?
John Griffith: The premise of our growth strategy goes back to the idea that there’s so much underinvestment in water and wastewater infrastructure in our country that there’s just a ton of opportunity out there and a lot of problems to solve for a lot of people.
BINJE: Why is that?
JG: There’s huge fragmentation. Most of the country’s water and wastewater infrastructure is municipally owned in little towns, where we might provide the water, but they run their own sewer systems. It’s that way in a lot of places because that’s the way it started. Towns needed to make sure things didn’t burn down, so they started a water system. Unlike electric and gas, which tend to be a lot more consolidated, it’s very patchwork.
The issue is that municipalities have a tendency to underinvest in systems. There are a lot of competing priorities for capital. The feeling is, ‘The water is coming out of the tap; it’s OK.’ So, they put the money somewhere else, which works for a while, but those deferred costs accumulate. So, a lot of systems just end up with problems that all of a sudden are quite significant and require a lot of capital, and the town doesn’t have the money to do it.
BINJE: How do you decide where to step in? If you’re going to be making 20 acquisitions a year, it feels like you’ll be looking everywhere and anywhere?
JG: Size is a starting point. We don’t want to do deals that are too small, because they take time, too. You have to do due diligence, go through integrations and regulatory approvals, which are cumbersome. At the same time, we don’t want to be overly reliant on really large deals, because those deals are uncertain.
From a financial perspective, we’re very focused on building repeatability, so every year we’re going to hit a certain amount of growth through acquisition. That means we focus on what we call the middle in terms of field sizes — 5,000 customers to 50,000 customers is the target range.
BINJE: Buying systems is one cost; fixing systems is quite another. Talk about investing $3.3 billion annually just in repair. Are our water systems in that bad shape?
JG: The state of the infrastructure just isn’t very good. We quote the American Society of Civil Engineers. They do report cards every five years. Drinking water is a ‘C-’; wastewater is a ‘D+.’ It’s bad. And it’s hard to do.
If you’re digging up roads to replace pipes under the ground, it’s slow going. The replacement cycles are very long. The average age of our pipe under the ground is 55 or 60 years. We’ve got 53,000 miles. We might replace 400 miles every year, which means we’re turning over our whole system in 115 years.
What constrains us is customer affordability and the risk associated with our system. We run a risk-based capital investment program. Think in terms of the heat map: Where’s the greatest risk in our system? That’s where we go. We triage everything.
BINJE: Utilities are unique in the sense that everyone wants them, but no one wants to pay for them. And the minute there are increased costs necessary to maintain basic functionality, there are complaints that the ‘big, bad’ utility companies are taking advantage of consumers. Talk about the business model for the sector?
JG: We need to invest enough that we’re comfortable with our risk profile in the state, but not so much that bills are going up more than they need to be. Utilities get socialized, so we can integrate costs into our system and spread those costs over our customer base. And we’re rate regulated. These rates are set by public utility commissions. We grow by investing the capital that needs to be invested — and which the public utility commissions declare to be prudent.
“It’s a business that doesn’t get a lot of attention, but, from a problem-solving perspective and a societal perspective, as well as from a financial perspective, it’s a really interesting business — and a great place to be.”
So, there’s no such thing as profiteering on the backs of customers and utilities. And frankly, for American Water, we wouldn’t need to do that anyway. There’s so much growth out there, so much capital investment that’s necessary, that we can grow just fine by doing what we’re supposed to do. The only thing that limits us is being careful about customer affordability. That’s our main driver, serving customers.
BINJE: Not to mention serving the military. Talk about those efforts.
JG: We call it our Military Services group, where we provide water and wastewater service on 18 military installations in a contract with the Department of Defense.
That’s a business we’re very proud of. It’s not a huge part of our business, given relative sizes, but it’s something that’s growing and someone that’s needed. You see those commercials on TV for Camp Lejeune (in North Carolina), where everybody is getting sick by the water — that happens way too much. We come in and take over systems and work with the government to invest in the systems to make them better.
BINJE: You’re a leader in veteran hiring, too.
JG: We’re proud of that, too. And it makes perfect sense for us. We have a lot of jobs that line up with vet skill sets. It’s a lot of engineering, operations, field-service representatives and corporate jobs.
We’ve actually dialed that up quite a bit. We partner with organizations that are veteran-focused. And why not? Veterans show up on time, are good teammates and have great spirit. And they served our country.
BINJE: Based on the awards you win, that spirit must reverberate around the company. Why are American Water and its subsidiaries, such as New Jersey American Water, such great places to work?
JG: I think we’re really good at knowing who we are — a sustainability company with great culture that treats its people well and is connected to the communities that we serve. Through the American Water Charitable Foundation, we give out about $5 million a year.
I think the magic here is the mission and how our workforce feels about what they do. People really do buy into delivering safe, clean, reliable and affordable water and wastewater services to our customers. When you get up in the morning feeling good about what you’re doing, it makes a difference.
About those water bottles
We asked John Griffith, CEO of American Water, if he’s bothered when people choose to pay for water bottles over tap water.
“It only bothers me to the extent that it can be regressive from a socioeconomic perspective,” he said. “Oftentimes, it’s economically disadvantaged communities that don’t have clean water service, and, therefore, people in those communities are forced into buying bottled water, which is a lot more expensive than the water out of the tap.
“Otherwise, it’s a free country — people can drink bottled water all they want.”
The PFAS problem
PFAS, or manmade “forever chemicals,” are helpful in consumer products but can cause harm to humans when they get into the water stream because they don’t degrade.
The EPA has put in rules requiring water companies to remediate. American Water CEO John Griffith is happy to do so — with one ask of chemical companies.
“We believe very strongly in the remediation that needs to occur; we’ve built it into our capital investment,” he said. “But, from a business perspective, we believe the ‘polluter pays’ concept needs to be enforced.”
For more information about American Water, go to amwater.com.
