FORM 10-Q                       Page 1 of 19

                   SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549




          (Mark One)

          (X)  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                                SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended            September 30, 1998             
                              --------------------------------------------- 
                                 OR

          ( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                 SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                 
                              --------------------------  -----------------
Commission File Number                             1-3437-2
                         --------------------------------------------------
                
                    AMERICAN WATER WORKS COMPANY, INC.
---------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

            Delaware                               51-0063696         
-------------------------------         -----------------------------------
(State or other jurisdiction of         (IRS Employer Identification No.)
incorporation or organization)          

            1025 Laurel Oak Road, Voorhees, New Jersey  08043
---------------------------------------------------------------------------
           (Address of principal executive offices) (Zip Code)

                              (609) 346-8200
---------------------------------------------------------------------------
           (Registrant's telephone number, including area code)

                              Not Applicable
---------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since     
   last report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.     Yes  X  No    
                                                 -----  -----
At November 1, 1998, the number of shares of common stock, $1.25 par value,
outstanding was 80,676,633 shares.


                



<PAGE>                           Page 2                           FORM 10-Q

                       PART I FINANCIAL INFORMATION
                       ----------------------------
                       Item 1.  Financial Statements
                       -----------------------------
        AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
        -----------------------------------------------------------
    Consolidated Statements of Income and Retained Earnings (Unaudited)
                   (In thousands, except per share amounts)
<TABLE>
                                                      Three Months Ended 
                                                         September 30,   
                                                       1998         1997
                                                     --------     --------
<S>                                                  <C>          <C>
CONSOLIDATED INCOME
Operating revenues                                   $282,548     $266,012
                                                     --------     --------
Operating expenses                               
  Operation and maintenance                           115,819      113,345
  Depreciation and amortization                        30,425       25,994
  General taxes                                        23,391       21,765
                                                     --------     --------
                                                      169,635      161,104
                                                     --------     --------
Operating income                                      112,913      104,908
Allowance for other funds used during 
  construction                                          2,570        1,817
Other income                                              942          699
                                                     --------     --------
                                                      116,425      107,424
                                                     --------     --------
Income deductions
  Interest                                             39,484       36,600
  Allowance for borrowed funds used
    during construction                                (1,390)      (1,329)
  Amortization of debt expense                            464          400
  Preferred dividends of subsidiaries                     830          878
  Other deductions                                        993          519
                                                     --------     --------
                                                       40,381       37,068
                                                     --------     --------
Income before income taxes                             76,044       70,356
Provision for income taxes                             29,399       26,865
                                                     --------     --------
Net income                                             46,645       43,491
Dividends on preferred stocks                             996          996
                                                     --------     --------
Net income to common stock                           $ 45,649     $ 42,495
                                                     ========     ========
Average shares of basic common stock outstanding       80,540       79,332
                                               
Basic and diluted earnings per common share on                              
average shares outstanding                           $   0.57     $   0.54
                                                     ========     ========





<PAGE>                         Page 3                            FORM 10-Q


                                                      Three Months Ended
                                                          September 30, 
                                                       1998         1997
                                                     --------     --------
<S>                                                  <C>          <C>
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period                       $739,134     $679,943

Add - net income                                       46,645       43,491
                                                     --------     --------
                                                      785,779      723,434
                                                     --------     --------

Deduct - dividends paid
  Preferred stock                                         882          882
  Preference stock                                        114          114
  Common stock  - $.205 per share in 1998;
                  $.19 per share in 1997               16,476       15,058
                                                     --------     --------
                                                       17,472       16,054
                                                     --------     --------
Balance at end of period                             $768,307     $707,380
                                                     ========     ========


The accompanying notes are an integral part of these financial statements.

</TABLE>































<PAGE>                           Page 4                           FORM 10-Q

        AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
        -----------------------------------------------------------
    Consolidated Statements of Income and Retained Earnings (Unaudited)
                   (In thousands, except per share amounts)
<TABLE>
                                                       Nine Months Ended 
                                                          September 30,   
                                                       1998         1997
                                                     --------     --------
<S>                                                  <C>          <C>
CONSOLIDATED INCOME
Operating revenues                                   $764,528     $717,284
                                                     --------     --------
Operating expenses                                 
  Operation and maintenance                           328,254      318,494
  Depreciation and amortization                        88,008       76,406
  General taxes                                        69,816       65,999
                                                     --------     --------
                                                      486,078      460,899
                                                     --------     --------
Operating income                                      278,450      256,385
Allowance for other funds used during 
  construction                                          6,676        4,844
Other income                                            1,369        1,053
                                                     --------     --------
                                                      286,495      262,282
                                                     --------     --------
Income deductions
  Interest                                            114,748      108,701
  Allowance for borrowed funds used
    during construction                                (3,454)      (3,149)
  Amortization of debt expense                          1,337        1,187
  Preferred dividends of subsidiaries                   2,569        2,652
  Other deductions                                      2,458        1,814
                                                     --------     --------
                                                      117,658      111,205
                                                     --------     --------
Income before income taxes                            168,837      151,077
Provision for income taxes                             65,542       57,916
                                                     --------     --------
Net income                                            103,295       93,161
Dividends on preferred stocks                           2,988        2,988
                                                     --------     --------
Net income to common stock                           $100,307     $ 90,173
                                                     ========     ========
Average shares of basic common stock outstanding       80,146       78,997

Basic and diluted earnings per common share on 
average shares outstanding                           $   1.25     $   1.14
                                                     ========     ========










<PAGE>                         Page 5                            FORM 10-Q


                                                       Nine Months Ended
                                                          September 30,
                                                       1998        1997
                                                     --------     --------
<S>                                                  <C>          <C>
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period                       $717,243     $662,183
   
Add - net income                                      103,295       93,161
                                                     --------     --------
                                                      820,538      755,344
                                                     --------     --------
Deduct - dividends paid                 
  Preferred stock                                       2,646        2,646
  Preference stock                                        342          342
  Common stock - $.615 per share in 1998;             
                 $.57 per share in 1997                49,243       44,976
                                                     --------     --------
                                                       52,231       47,964
                                                     --------     --------
Balance at end of period                             $768,307     $707,380
                                                     ========     ========


The accompanying notes are an integral part of these financial statements.

</TABLE>
































<PAGE>                           Page 6                           FORM 10-Q 
                                  
       AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
       -----------------------------------------------------------
                 Consolidated Balance Sheet (Unaudited)  
                              (In thousands)
<TABLE>                                                          
                                                                      
                                             September 30      December 31
                                                  1998             1997   
                                              -----------      -----------
<S>                                           <C>              <C>
ASSETS
Property, plant and equipment
  Utility plant - at original cost less
    accumulated depreciation                  $ 3,914,171      $ 3,713,390
  Utility plant acquisition adjustments            56,248           58,976
  Non-utility property, net of accumulated 
    depreciation                                   31,666           32,942
  Excess of cost of investments in 
    subsidiaries over book equity at 
    acquisition                                    24,365           22,745
                                              -----------      -----------
                                                4,026,450        3,828,053
                                              -----------      -----------
                                                
Current assets  
  Cash and cash equivalents                        29,209           12,661
  Customer accounts receivable                     82,092           67,318
  Allowance for uncollectible accounts             (1,611)          (1,249)
  Unbilled revenues                                60,773           55,750
  Miscellaneous receivables                         8,157            5,673
  Materials and supplies                           12,466           11,415
  Deferred vacation pay                            10,864           11,132
  Other                                            10,518           10,158
                                              -----------      -----------
                                                  212,468          172,858
                                              -----------      -----------
Regulatory and other long-term assets
  Regulatory asset - income taxes                                   
    recoverable through rates                     185,100          181,566
  Debt and preferred stock expense                 32,629           30,216
  Deferred pension expense                         25,385           22,163
  Deferred postretirement benefit expense          11,488           11,372
  Deferred treatment plant costs                    7,139            7,690
  Deferred water utility billings                   2,198            4,013
  Tank painting costs                              12,494           10,531
  Funds restricted for construction                18,210            5,340
  Other                                            51,908           40,484
                                              -----------      -----------
                                                  346,551          313,375
                                              -----------      -----------
                                              $ 4,585,469      $ 4,314,286
                                              ===========      ===========







<PAGE>                           Page 7                          FORM 10-Q

                                                                    
                                              September 30      December 31
                                                  1998             1997   
                                               -----------     -----------
<S>                                            <C>             <C>
CAPITALIZATION AND LIABILITIES
Capitalization
  Common stock                                 $   100,756     $    99,607
  Paid-in capital                                  352,096         326,382
  Retained earnings                                768,307         717,243
  Unearned compensation                             (1,201)           (816)
                                               -----------     -----------
    Common stockholders' equity                  1,219,958       1,142,416

  Preferred stocks with mandatory redemption
    requirements                                    40,000          40,000
  Preferred stocks without mandatory 
    redemption requirements                         11,673          11,673

  Preferred stocks of subsidiaries with 
    mandatory redemption requirements               38,567          39,734
  Preferred stocks of subsidiaries without
    mandatory redemption requirements                6,255           6,256

  Long-term debt
    American Water Works Company, Inc.             236,000         116,000
    Subsidiaries                                 1,844,746       1,754,766
                                               -----------     -----------
                                                 3,397,199       3,110,845
                                               -----------     -----------
Current liabilities                             
  Bank debt                                         84,714         134,762
  Current portion of long-term debt                 18,806          25,148
  Accounts payable                                  29,800          42,766
  Taxes accrued, including federal income           27,838          14,409
  Interest accrued                                  42,457          33,404
  Accrued vacation pay                              11,010          11,239
  Other                                             34,255          44,725
                                               -----------     -----------
                                                   248,880         306,453
                                               -----------     -----------


















<PAGE>                           Page 8                           FORM 10-Q

                                                                     
                                               September 30    December 31 
                                                  1998             1997 
                                               -----------     -----------
<S>                                            <C>             <C>
Regulatory and other long-term liabilities 
  Advances for construction                    $   134,378     $   127,457
  Deferred income taxes                            439,964         418,248
  Deferred investment tax credits                   35,301          36,239
  Accrued pension expense                           43,303          41,079
  Accrued postretirement benefit expense             9,924          10,034
  Other                                             13,689           6,197
                                               -----------     -----------
                                                   676,559         639,254
                                               -----------     -----------
Contributions in aid of construction               262,831         257,734
                                               -----------     -----------
Commitments and contingencies                            0               0
                                               -----------     -----------
                                               $ 4,585,469     $ 4,314,286
                                               ===========     ===========


 

The accompanying notes are an integral part of these financial statements.

</TABLE>































<PAGE>                          Page 9                            FORM 10-Q

       AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
       -----------------------------------------------------------
             Consolidated Statement of Cash Flows (Unaudited)
                           (In thousands)
<TABLE>
                                                       Nine Months Ended
                                                          September 30,     
                                                       1998         1997  
                                                     --------     --------
<S>                                                  <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                           $103,295     $ 93,161
Adjustments
   Depreciation and amortization                       88,008       76,406
   Provision for deferred income taxes                 19,150       20,317
   Provision for losses on accounts receivable          4,550        5,033
   Allowance for other funds used during                                
     construction                                      (6,676)      (4,844)
   Employee benefit expenses greater (less) than 
     funding                                           (1,219)         761
   Employee stock plan expenses                         4,486        4,207
   Deferred tank painting costs                        (3,283)      (1,393)
   Deferred rate case expense                          (1,137)      (1,689)
   Deferred treatment plant costs                      (1,606)      (2,265)
   Amortization of deferred charges                     7,558        6,578
   Other, net                                          (8,485)       2,176
   Changes in assets and liabilities
      Accounts receivable                             (21,446)     (12,763)
      Unbilled revenues                                (5,023)      (3,856)
      Other current assets                             (1,411)      (5,001)
      Accounts payable                                (12,966)      (8,316)
      Taxes accrued, including federal income          13,429       16,184
      Interest accrued                                  9,053        6,271
      Other current liabilities                       (10,470)      (8,829)
                                                     --------     --------
Net cash from operating activities                    175,807      182,138
                                                     --------     --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures                            (241,717)    (231,087)
Allowance for other funds used during 
  construction                                          6,676        4,844
Utility system acquisitions                           (42,072)        (125)
Proceeds from the disposition of property,                   
  plant and equipment                                   1,802          934
Removal costs from property, plant and 
  equipment retirements                                (4,531)      (5,625)
Funds restricted for construction activity            (12,870)      (6,714)
                                                     --------     --------
Net cash used in investing activities                (292,712)    (237,773)
                                                     --------     --------










<PAGE>                          Page 10                          FORM 10-Q  

                                                        Nine Months Ended
                                                           September 30,    

                                                       1998         1997 
                                                     --------     --------
<S>                                                  <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt                         $225,700     $107,000
Proceeds from common stock                             21,403       18,231
Net borrowings(repayments)under                        
  line-of-credit agreements                           (50,048)       6,702
Advances and contributions for construction,          
  net of refunds                                       15,588       14,311
Debt issuance costs                                    (3,729)      (1,388)
Repayment of long-term debt                           (22,062)     (42,514)
Redemption of preferred stocks                         (1,168)      (1,056)
Dividends paid                                        (52,231)     (47,964)
                                                     --------     --------
Net cash from financing activities                    133,453       53,322
                                                     --------     --------
Net increase (decrease) in cash and
  cash equivalents                                     16,548       (2,313)
Cash and cash equivalents at beginning  
  of period                                            12,661       12,974
                                                     --------     --------

Cash and cash equivalents at end of period           $ 29,209     $ 10,661
                                                     ========     ========

Cash paid during the period for:
  Interest, net of capitalized amount                $108,821     $104,285
                                                     ========     ========
  Income taxes                                       $ 37,693     $ 31,351
                                                     ========     ========


Common stock issued in lieu of cash in connection with the Employees' Stock
Ownership Plan, the Savings Plan for Employees and the Long-Term
Performance-Based Incentive Plan totaled $6,210 in 1998 and $4,873 in 1997.

The accompanying notes are an integral part of these financial statements.

</TABLE>

















<PAGE>                          Page 11                          FORM 10-Q

       AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
       -----------------------------------------------------------
        Information Accompanying Financial Statements (Unaudited)
           (In thousands, except share and per share amounts)
                            
                                                  Septmber 30   December 31
                                                      1998         1997  
                                                   ----------  -----------

Preferred stocks with mandatory redemption requirements
  Cumulative preferred stock - $25 par value
    Authorized - 1,770,000 shares
      8.50% series (non-voting) - 1,600,000 shares
        outstanding                                $   40,000  $    40,000
                                                   ----------  -----------

Preferred stocks without mandatory redemption requirements
  Cumulative preferred stock - $25 par value
      5% series (one-tenth of a vote per share)
        - 101,777 shares outstanding               $    2,544  $     2,544
  Cumulative preference stock - $25 par value
    Authorized - 750,000 shares
      5% series (non-voting) - 365,158 shares 
        outstanding                                     9,129        9,129
  Cumulative preferential stock - $35 par value
    Authorized - 3,000,000 shares                          --           --
                                                   ----------  -----------
                                                   $   11,673  $    11,673
                                                   ==========  ===========

The terms of the 8.50% preferred stock provide that all shares of the
series shall be redeemed on December 1, 2000.
                                                   
Common stockholders' equity
Common stock - $1.25 par value
  Authorized - 300,000,000 shares
  Outstanding - 80,605,145 shares at September 30, 1998;                    
                79,685,612 at December 31, 1997    $  100,756  $    99,607
Paid-in capital                                       352,096      326,382
Retained earnings                                     768,307      717,243
Unearned compensation                                  (1,201)        (816)
                                                   ----------  -----------
                                                   $1,219,958  $ 1,142,416
                                                   ==========  ===========

During the first nine months of 1998, 607,075 shares were issued in
connection with the Dividend Reinvestment and Stock Purchase Plan, 95,499
shares were issued in connection with the Employees' Stock Ownership Plan,
146,509 shares were issued in connection with the Savings Plan for
Employees and 70,450 shares were issued in connection with the Long-Term 
Performance-Based Incentive Plan.  At September 30, 1998, common shares
reserved for issuance in connection with the Company's stock plans were
60,923,162 shares for the Stockholder Rights Plan, 5,587,811 shares for the
Dividend Reinvestment and Stock Purchase Plan, 707,559 shares for the
Employees' Stock Ownership Plan, 845,512 shares for the Savings Plan for
Employees and 327,135 shares for the Long-Term Performance-Based Incentive
Plan.


<PAGE>                          Page 12                          FORM 10-Q
 
      AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
       -----------------------------------------------------------
          Notes to Consolidated Financial Statements (Unaudited)
             (Dollars in thousands, except per share amounts)              

NOTE 1 -- Financial Statement Presentation
The information presented in this Form 10-Q is unaudited.  In the opinion
of management the information reported reflects all adjustments, consisting
of normal recurring adjustments, which were necessary to a fair statement
of the results for the periods reported.  Certain reclassifications have
been made to conform previously reported data to the current presentation.

NOTE 2 -- Acquisitions
On April 1, 1998, the Company completed the previously announced
acquisition of East Honolulu Community Services, Inc. ("EHCS"), a suburban
Honolulu wastewater utility located on the eastern tip of Oahu, Hawaii. 
The system was acquired for $17.3 million from Maunalua Associates, Inc., a
subsidiary of Kemper Corporation. 

EHCS provides wastewater service to a population of approximately 29,000 in
the community of Hawaii Kai.  For the latest fiscal year ended December 31,
1997, EHCS had unaudited revenues of $6.3 million, net income of $.8
million and total assets of $17.1 million.

On October 13, 1998, the Company announced that an agreement in principle
had been reached to acquire National Enterprises, Inc.(NEI)for
approximately $700 million.  Subsidiaries of NEI, a privately owned
company, provide water service to more than 1.7 million people in Missouri,
Illinois, Indiana and New York.  

The transaction, which will be accounted for as a pooling of interests,
will be accomplished through a tax free exchange of 14,937,000 shares of
the Company's stock valued at $475 million, for all of the outstanding
shares of NEI and $225 million of assumed debt.  It is anticipated that the
transaction will be completed in 1999, following regulatory approvals,
termination of the waiting period under Federal anti-trust laws and
completion of other requirements.  

NEI is the parent company of Continental Water Company, which in turn owns: 
St. Louis County Water Company serving suburban St. Louis, Missouri;
Northwest Indiana Water Company serving Gary, Hobart and surrounding areas;
Northern Illinois Water Company serving Champaign, Urbana and surrounding
areas; and Long Island Water Corporation serving the southwest portion of
Nassau County on Long Island, New York.  NEI also has passive investments
in the telecommunications industry owning approximately 4 million shares of
ITC Deltacom and .6 million shares of Powertel as well as an interest in
privately held ITC Holdings.

All of the common stock of NEI is currently owned by descendants of the
Charles Stewart Mott family.  Upon completion of this transaction, the Mott
family will hold approximately 16% of the outstanding shares of American
Water Works common stock.  It is expected that two representatives of the
Mott family will be elected to the Board of the Company.

NOTE 3 -- New Accounting Standards
In 1998, the Company will adopt two new accounting standards issued by the
Financial Accounting Standards Board in June of 1997.  Statement of 


<PAGE>                           Page 13                       FORM 10-Q

Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," and SFAS No. 131 "Disclosures About Segments of an Enterprise and 
Related Information," neither of which will have any effect on the
Company's financial position or results of operations as they require only
changes to, or additions to, current disclosures.

Also in 1998, the Company will adopt SFAS No. 132, "Employers' Disclosures
about Pensions and Postretirement Benefits," which revises and standardizes
employers' disclosures about pension and other postretirement benefit plans
required by SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits," and SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," but does not
change the measurement or recognition of those plans.  This new standard,
issued in February 1998, is effective for fiscal years beginning after
December 15, 1997.











































<PAGE>                           Page 14                       FORM 10-Q

                     PART I - FINANCIAL INFORMATION
 Item 2.  Management's Discussion and Analysis of Financial Condition
                       and Results of Operations                      
--------------------------------------------------------------------------

Results of Operations
---------------------
Operating revenues for the third quarter and the first nine months of 1998
were higher than for the same periods of 1997 by 6% and 7%, respectively. 
The increases are primarily due to authorized rate increases for several
subsidiaries in the latter part of 1997.

During the first ten months of 1998, five utility subsidiaries received
rate orders which are expected to provide approximately $4.8 million in
additional annual revenues. Five subsidiaries have rate increase
applications on file before regulatory agencies which, if granted in full,
would provide approximately $42.7 million in additional annual revenues.

Water sales volume during the third quarter of 1998 increased 1% to 76.7
billion gallons from 76.3 billion gallons in the third quarter of 1997. 
The 192.0 billion gallons of sales volume for the first nine months of 1998
was approximately equal to the 192.6 billion gallons sold in the same
period of 1997.  

Total operating expenses for the third quarter and for the first nine
months of 1998 increased by 5% over the same periods last year.  Operation
and maintenance expenses in the third quarter and first nine months of 1998
increased 2% and 3%, respectively, when compared to the same periods in
1997.  Depreciation expense was higher for the third quarter and first nine
months of 1998 when compared to the third quarter and first nine months of
1997 due to growth in utility plant in service.  General taxes increased in
the third quarter and first nine months of 1998 when compared to the same
periods of 1997 reflecting higher property values and increased gross
receipts.

Income deductions, primarily interest, were 9% higher for the third quarter
and 6% higher for the first nine months when compared to the same periods
in 1997.  The increases can be attributed primarily to an increase in total
debt to fund the construction of new water service assets.

The total allowance for funds used during construction ("AFUDC") recorded
in the third quarter and the first nine months of 1998 increased 26% and
27%, respectively, when compared to the same periods in 1997.  The
increases were a result of construction of new water service assets.  The
utility subsidiaries record AFUDC to the extent permitted by the regulatory
authorities. 

Income taxes increased in the third quarter and the first nine months of
1998 when compared to the same periods in 1997. The increases can be
attributed to increased earnings in 1998 and the reversal of flow-through
differences primarily relating to depreciation.

Net income to common stock was $45.6 million for the third quarter of 1998
compared with $42.5 million for the same period in 1997.  Net income to
common stock for the first nine months of 1998 was $100.3 million compared 
with $90.2 million for the first nine months of 1997.





<PAGE>                           Page 15                       FORM 10-Q


Capital Resources and Liquidity
-------------------------------
All shares of common stock issued during 1998 have been the result of stock
issued in conjunction with the Dividend Reinvestment and Stock Purchase
Plan, the Employees' Stock Ownership Plan, the Savings Plan for Employees,
and the Long-Term Performance-Based Incentive Plan.

During the balance of 1998, the Company plans to continue issuing common
stock through its Dividend Reinvestment and Stock Purchase Plan and the
Savings Plan for Employees.  Proceeds from the issuance of common stock
will fund additional equity investments in subsidiaries.

Eleven utility subsidiaries issued $105.7 million of long-term debt during
the first ten months of 1998.  The Company issued $120.0 million of 
long-term debt on July 15, 1998.  In addition, the Company invested $93.4
million in the common stock of thirteen subsidiaries during the first ten
months of 1998.  One subsidiary re-purchased $3.5 million of the
subsidiary's common stock from the Company.  The proceeds from these
financing arrangements have been used to fund construction programs and
repay bank borrowings.  It is anticipated that some subsidiaries will sell
long-term debt to institutional investors and common stock to the Company
during the remainder of 1998, with the proceeds used to repay bank loans
and to fund construction projects.


Year 2000 Issues
----------------
Many computer systems in use today were designed and developed without
regard to the impact of the upcoming century change.  Computer programs and
devices often use only two digits for the year to identify dates.  As a
result, computer systems may fail completely or create erroneous results
unless corrective measures are taken.

The Company utilizes numerous computerized systems and date sensitive
devices in its operations.  If some of these key systems and devices are
not ready for the Year 2000 there will likely be adverse effects on the
Company's business, results of operations, and financial condition.  The
Company is also dependent on third parties that supply important materials
and services such as water treatment chemicals, electric power for pumps
and the processing of customer payments.  The failure of some of these
third parties to be Year 2000 compliant on a timely basis would also have
an adverse effect on the Company.  The Company has assigned a very high
priority to its Year 2000 compliance efforts, and as discussed below,
considerable progress has been made.  These efforts are expected to be
substantially completed in the second quarter of 1999.  

An inventory of all important computer programs and devices with embedded
technology has been prepared for each utility subsidiary.  Those
inventories are being used to track the status of any necessary upgrades or
replacements, and to log the results of testing by Company personnel to
ensure that all important systems are in fact Year 2000 compliant.  In some
instances work on other information technology projects has been delayed
because of Year 2000 remediation projects, but these delays are not
expected to have a significant impact on the Company's operations.



<PAGE>                           Page 16                       FORM 10-Q


Because the Company is particularly dependent on its computerized
financial, customer service and treatment plant automation systems, those
systems are the primary areas in which Year 2000 efforts are focused.

The Company is currently implementing two new software packages for
financial and customer service applications that are Year 2000 compliant. 
Although the decision to purchase and implement this software was based on
an analysis of all of the Company's current and future systems
requirements, once the decision was made these projects became a key part
of the Company's Year 2000 compliance plan.  The enterprise software for
financial applications is already in use by many of the utility
subsidiaries, and implementation and testing is expected to be completed
during the first quarter of 1999.  The new customer service software is
currently being used by two of the Company's subsidiaries, and additional
subsidiaries are expected to begin using the new software in 1999. 
Implementation of the new customer service software will continue beyond
1999, so the customer service software currently used by many of the
subsidiaries is also being made Year 2000 compliant.  All of the utility
subsidiaries are expected to have Year 2000 compliant customer service
software by the middle of 1999.  In conjunction with these two projects,
midrange and personal computers have been upgraded with hardware and
operating systems that are Year 2000 compliant.

Many of the Company's water treatment plants utilize automation systems
that are controlled by personal computers.  These systems are being tested
and upgraded if necessary, and that work is expected to be completed at
most facilities by the end of 1998.  The Company's production and
distribution facilities also utilize many pieces of equipment with embedded
microcontroller chips.  These chips, which may be time/date sensitive, are
an integral part of critical operating equipment.  Much of this equipment
cannot be field tested to evaluate Year 2000 compliance, so the Company has
developed a systematic approach to identify and resolve this issue that is
expected to be completed during the first quarter of 1999.  As a
contingency, the Company's production and distribution facilities can be
operated manually in the event of an internal Year 2000 related failure.  

In addition to the work being done on the Company's internal systems,
interfaces used to exchange information with banks and other entities are
being tested to ensure Year 2000 compliance.  And where feasible, plans are
being formulated to minimize the impact of problems outside parties may
have in providing supplies and services.

The cost of the new financial and customer service software, implementation
consulting services, and the cost of upgrading and replacing computers and
other equipment will be capitalized by the utility subsidiaries and
included in future rate increase requests.  The total cost of these capital
projects is expected to be approximately $45 million, of which
approximately $30 million has been incurred to date.  Costs for specific
Year 2000 remediation projects will be charged to expense unless they meet
the requirements for deferral as regulatory assets.  However, current
period expenses are not expected to be materially different from the usual
ongoing level of information systems related expenses. 








<PAGE>                         Page 17                          FORM 10-Q



Forward Looking Information
---------------------------
This report, including management's discussion and analysis, contains
certain forward looking statements regarding the Company's results of
operations and financial position.  These forward looking statements are
based on current information and expectations, and are subject to risks and
uncertainties which could cause the Company's actual results to differ
materially from expected results.

















































<PAGE>                         Page 18                          FORM 10-Q


                      PART II - OTHER INFORMATION

               Item 6.  Exhibits and Reports on Form 8-K
               -----------------------------------------


A.  Exhibits
    --------

Exhibit number (27), Financial Data Schedule, is filed herewith
electronically.


B.  Reports on Form 8-K
    -------------------

No report on Form 8-K was filed by the registrant during the quarter ended
September 30, 1998.
   









































<PAGE>                         Page 19                            FORM 10-Q



SIGNATURES
----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                   AMERICAN WATER WORKS COMPANY, INC.



Date November 10, 1998             /s/ J. James Barr      
----------------------             --------------------------------------
                                   President and CEO
                                   (Authorized Officer)





Date November 10, 1998             /s/ Robert D. Sievers
----------------------             --------------------------------------
                                   Comptroller
                                   (Chief Accounting Officer)