Water utility American Water (NYSE:AWK) announced yesterday that its Illinois subsidiary closed on the acquisition of the city of Grafton's water system in a $1.8 million deal. It adds 400 customers to the utility's existing service.

American Water has been providing Grafton with water services since 2010 under a wholsesale sale-for-resale basis, but with the acquisition Grafton residents will now become direct customers of Illinois American Water and will receive their first bill approximately 30 days after the closing date.

Noting the history the utility has with the city, Illinois American Water President Karla Olson Teasley said, "Through this acquisition, we will expand our existing footprint and help ensure local residents have access to a long-term, reliable water supply for years to come."

The Grafton system will be incorporated into American Water's Alton District, which currently serves residents in Alton, Godfrey, and Elsah. Jersey County Rural Water, Fosterburg Water District, Brighton, and Forest Homes-Maple Park remain wholesale customers.

Headquartered in Voorhees, N.J., American Water is the largest publicly traded U.S. water and wastewater utility company.