American Water said that its total investment in both subsidiaries was approximately $450m as of 31 December 2010, and it plans to use the proceeds from the sale to reduce both equity and debt financing.

American Water president and CEO Jeff Sterba said that this transaction allows the company to direct its focus to those operations where it can best serve customers and meet business objectives.

American Water, a water and wastewater utility company, serves approximately 174,000 customers in Arizona and New Mexico.

Last year, EPCOR signed an agreement with American States Water to purchase and operate the Chaparral City Water, which serves 13,000 customers in the town of Fountain Hills, Arizona.

EPCOR is in the business of building, owning and operating water and wastewater treatment facilities in the southwestern US.