Aqua America, Inc.
762 W. Lancaster Avenue
Bryn Mawr, PA 19010

September 2, 2010

VIA EDGAR AND FACSIMILE (202.772.9361)

Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549

Attn: H. Christopher Owings, Assistant Director, Division of Corporation Finance

RE: Aqua America, Inc.

Form 10-K for Fiscal Year Ended December 31, 2009
Filed February 26, 2010
Definitive Proxy Statement filed on Schedule 14A
Filed April 2, 2010
File No. 001-06659

Dear Mr. Owings:

This letter is being submitted in response to the comments given by the staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) as set forth in your letter to Mr. Nicholas DeBenedictis, dated August 19, 2010, with respect to the above-reference filings.

Definitive Proxy Statement filed on Schedule 14A

Compensation Discussion and Analysis, page 17

Benchmarking Competitive Compensation and the Role of the Committee’s Consultant page 18

1.

We note your response to comment 3 in our letter dated July 8, 2010. Please clarify whether you use the entire Composite Market database as a reference point, since your disclosure indicates that you use “size-adjusted utility companies” in the Composite Market to benchmark total cash compensation and “size-adjusted utility companies and general businesses” in the Composite Market to benchmark equity incentives. Also disclose how the component companies are size-adjusted. Please disclose the component companies in the general industry database that you use as a reference point on which to base compensation decisions. You may wish to present this data in an appendix.

Securities and Exchange Commission
September 2, 2010
Page 2

In response to the staff’s comments in its August 19, 2010 letter, all the utility companies in the Composite Market (consisting of the companies participating in the water utility compensation survey and the investor-owned utility companies included in the compensation consultant’s utility database) are used as a reference point to benchmark total cash compensation for the Company’s executives and all of the companies included in the Composite Market are used as a reference point to benchmark the equity incentives for the Company’s executives. In future filings we will disclose all the companies in the Composite Market in an appendix to the Proxy Statement (such companies are set forth in Appendix A hereto). In addition, in future filings we will disclose how the compensation data from the companies in the Composite Market are size-adjusted by the independent compensation consultant. An illustration of how these additional disclosures would have been presented in the “Benchmarking Competitive Compensation and the Role of the Committee’s Consultant” section of its Compensation Discussion and Analysis of the Company’s Definitive Proxy Statement filed on Schedule 14A filed on April 2, 2010 is set forth below:

“In developing the market rates for the executive officers, the consultant uses survey compensation data from utility companies in the consultant’s utility industry database, an independent water utility compensation survey, and the consultant’s general industry database, which together is referred to as the “Composite Market”. The Composite Market is composed of all 57 investor-owned utility companies included in the consultant’s utility industry database, approximately 60 companies, from the consultant’s utility industry database, all 8 water utility companies fromparticipating in the independent water utility database compensation survey and approximately 750 companies that participate included in the consultant’s general industry database, which together is referred to as the “Composite Market”. The companies participating in the water utility compensation survey, the consultant’s utility industry database and the consultant’s general industry database are listed in Appendix A to this Proxy Statement. The Company has no involvement in the selection of the companies that are included in these databases or the survey. Each company listed in Appendix A is part of the Composite Market. Information on compensation for positions in these databases with similar scopes of responsibilities is compared primarily based on the revenues of the organizations in the databases. For instance, a chief executive officer in a company with higher revenues is usually paid more than a chief executive officer in a company with lower revenues. Due to the relatively limited number of investor-owned water utility companies of the Company’s size, the Compensation Committee believes that using this broad surveyComposite Market data provides reasonable and reliable data for determining competitive compensation levels. Towers Watson uses regression analysis to size-adjust the survey data for each named executive officer’s scope of responsibilities, where possible.

Securities and Exchange Commission
September 2, 2010
Page 3

In measuring the competitiveness of the Company’s executive compensation program, the Compensation Committee compares:

•

theeach executive officer’s total cash compensation to the market rate derived from size-adjusted compensation data for the executive’s position at the 50th percentile of compensation levels for size-adjusted companies in the Composite Marketcomparable executives at only the utility companies included in the Composite Market; and

•

theeach executive officer’s equity incentives to the market rate derived from size-adjusted compensation data for the executive’s position at the 50th percentile of a 50/50 blend of size-adjusted utility companies and general businesses in the Composite Marketcomparable executives at all companies included in the Composite Market (in determining such market rate, the utility companies included in the Composite Market are weighted 50% as a group, and the general industry companies included in the Composite Market are weighted 50% as a group). We believe that a blended approach is appropriate for equity incentives in order to place a strong focus on creating value for Aqua America’s shareholders and to enable us to compete for talent both within and outside of the traditional utility industry.

The Company and the independent compensation consultant are mindful that compensation levels for executives of utility and general industry companies are typically aligned with a company’s scope as defined by revenues. In other words, executives in companies with higher revenues are generally paid more than executives with comparable positions in companies with lower revenues. Because the companies included in the Composite Market vary widely in terms of revenues, the independent compensation consultant size-adjusts the data using regression analysis to determine market rates for total cash compensation and equity incentives. Regression analysis is an objective calculation that identifies a relationship between one variable (in this case, total cash compensation and equity incentives) and another variable that is closely related to it (in this case, total company revenues). Therefore, in developing the market rate for total cash compensation and equity incentives, the independent compensation consultant uses regression analysis to determine what utility companies in the Composite Market would pay at the median as total cash compensation for positions comparable to those of the Company’s executives and what amount of equity incentives all companies in the Composite Market would provide at the median, if such companies had revenues similar to the revenues of the Company.”

In addition, pursuant to the Staff’s request, the Company hereby acknowledges that:

•

The Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•

The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Securities and Exchange Commission
September 2, 2010
Page 4

Please do not hesitate to contact the undersigned at 610-645-1035 if you should have any questions or comments with regard to these responses.

		Sincerely,
		/s/ Roy H. Stahl
		Roy H. Stahl
		Chief Administrative Officer,
		General Counsel and Secretary

cc:		Nicholas DeBenedictis
		David P. Smeltzer
		Robert A. Rubin

APPENDIX A

Companies Included in Composite Market

Companies Participating in Water Utility Compensation Survey

Aqua America, Inc.		San Jose Water Company
Aquarion Water Company		Suburban Water Systems
Middlesex Water Company		United Water
Pennichuck Water Company		The York Water Company

Utility Companies Included in Compensation Consultant’s Utility Industry Database

Companies Included in Compensation Consultant’s General Industry Database