Press Release

Cal Water Announces Results for the 3rd Quarter of 2008

SAN JOSE, CA, Oct 29, 2008 (MARKET WIRE via COMTEX News Network) -- California Water Service Group (NYSE: CWT) today announced net income of $22.2 million for the third quarter of 2008, up 61% compared to $13.8 million in the third quarter of 2007. Earnings per diluted share were $1.06 for the third quarter of 2008, up 58% compared to earnings per diluted share of $0.67 in the third quarter of 2007.

Revenues increased by $17.9 million, or 16%, to $131.7 million, with rate increases adding $18.0 million and water usage by new customers adding $1.1 million. Other changes reduced revenues by $1.2 million.

Total operating expenses for the third quarter of 2008 increased by $8.6 million to $104.9 million. Water production costs increased by $1.4 million compared to the same period last year. Administrative and general costs increased $0.3 million, or 2%. Other operations costs increased $1.2 million, due primarily to increases in water quality laboratory fees, purchases of chemicals and filters, conservation program costs, and uncollectable accounts.

Fewer water system repairs resulted in a $0.4 million decrease in maintenance expense, which was $3.8 million for the quarter. Depreciation expense increased $0.9 million to $9.3 million as a result of increases in capital expenditures.

Other income, net of income taxes, was a loss of $0.5 million, compared to a gain of $0.8 million last year, due primarily to a mark-to-market adjustment associated with the market value of assets in the company's non-qualified retirement plans.

For the twelve months ended September 30, 2008, net income was $40.5 million and diluted earnings per share were $1.94, compared to net income of $29.5 million and diluted earnings per share of $1.43 for the same period in the prior year. Revenues for the trailing twelve months were $396.1 million, compared to $361.8 million for the same period last year.

"During the third quarter, Cal Water accomplished many significant milestones. First, the Company completed its 2007 General Rate Case and, as a result, received timely rate relief on a number of significant items. With the support of the California Public Utilities Commission (CPUC), the rate case was completed on schedule with rate relief starting in early July. Further, effective July 1st, the Company implemented the Water Rate Adjustment Mechanism (WRAM), the Modified Cost Balancing Account (MCBA), and tiered rates. With these three new mechanisms in place, Cal Water can further pursue water efficiency programs that benefit ratepayers and reduce overall water demand. These new mechanisms support the CPUC's goals set forth in the Water Action Plan to improve water efficiency throughout the state," said President and Chief Executive Officer Peter C. Nelson.

As reported on September 3, 2008, the Company also completed its acquisition of Waikoloa Resort Utilities, Waikoloa Water Company, Inc., and Waikoloa Sanitary Sewer Company, Inc. (collectively known as West Hawaii Utilities), which together provide water utility services to 1,970 customer accounts and wastewater services to 300 customer accounts on the Big Island of Hawaii.

"We are excited to welcome our new customers on the big island of Hawaii and look forward to serving them with the same quality and care we have become known for," added Nelson.

All stockholders and interested investors are invited to listen to the 2008 third quarter conference call on October 30, 2008, at 11:00 a.m. (EDT), by dialing 1-866-259-1024 and keying in ID# 1285532. A replay of the call will be available from 2:00 p.m. (EDT) October 30, 2008, through December 29, 2008, at 888-266-2081, ID# 1285532. The call, which will be hosted by President and CEO, Peter Nelson and Vice President and Chief Financial Officer, Martin A. Kropelnicki, will also be webcast under the investor relations tab at www.calwatergroup.com.

California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., CWS Utility Services, and HWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii communities. Group's common stock trades on the New York Stock Exchange under the symbol "CWT".

This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management's judgment about the Company, the water utility industry and general economic conditions. Such words as expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: governmental and regulatory commissions' decisions; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; new legislation; electric power interruptions; increases in suppliers' prices and the availability of supplies including water and power; fluctuations in interest rates; changes in environmental compliance and water quality requirements; acquisitions and our ability to successfully integrate acquired companies; the ability to successfully implement business plans; changes in customer water use patterns; the impact of weather on water sales and operating results; access to sufficient capital on satisfactory terms; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; the involvement of the United States in war or other hostilities; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.

Additional information is available at our Web site at www.calwatergroup.com.

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands, except per share data)             September 30 December 31
                                                      2008         2007
                                                  -----------  -----------
ASSETS
Utility plant:
   Utility plant                                  $ 1,552,267  $ 1,447,047
   Less accumulated depreciation and amortization    (463,375)    (436,851)
                                                  -----------  -----------
      Net utility plant                             1,088,892    1,010,196
                                                  -----------  -----------
Current assets:
   Cash and cash equivalents                            9,409        6,734
   Receivables
      Customers                                        30,466       18,600
      Other                                            10,030        8,617
   Unbilled revenue                                    19,896       12,911
   Materials and supplies at average cost               4,914        4,744
   Taxes, prepaid expense, and other assets             8,992        8,369
                                                  -----------  -----------
      Total current assets                             83,707       59,975
                                                  -----------  -----------
Other assets:
   Regulatory assets                                   90,894       90,908
   Goodwill                                             4,672            -
   Other assets                                        22,881       23,420
                                                  -----------  -----------
      Total other assets                              118,447      114,328
                                                  -----------  -----------
                                                  $ 1,291,046  $ 1,184,499
                                                  ===========  ===========
CAPITALIZATION AND LIABILITIES
Capitalization:
   Common stock, $.01 par value                   $       207  $       207
   Additional paid-in capital                         213,596      211,885
   Retained earnings                                  187,565      173,617
                                                  -----------  -----------
      Total common stockholders' equity               401,368      385,709
   Preferred stock                                          -        3,475
   Long-term debt, less current maturities            288,663      289,220
                                                  -----------  -----------
      Total capitalization                            690,031      678,404
                                                  -----------  -----------
Current liabilities:
   Current maturities of long-term debt                 2,701        2,701
   Accounts payable                                    45,616       36,694
   Notes payable                                       40,284            -
   Accrued expenses and other liabilities              57,448       30,258
                                                  -----------  -----------
      Total current liabilities                       146,049       69,653
Unamortized investment tax credits                      2,467        2,467
Deferred income taxes, net                             69,948       69,712
Pension and postretirement benefits other than
 pensions                                              39,747       39,444
Regulatory and other liabilities                       47,076       38,783
Advances for construction                             177,056      168,024
Contributions in aid of construction                  118,672      118,012
Commitments and contingencies
                                                  -----------  -----------
                                                  $ 1,291,046  $ 1,184,499
                                                  ===========  ===========
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Three-Months ended:
                                              September 30,  September 30,
                                                  2008           2007
                                              -------------  -------------
Operating revenue                             $     131,702  $     113,851
                                              -------------  -------------
Operating expenses:
   Water production costs                            46,455         45,063
   Admistrative and General                          14,995         14,733
   Other operations                                  12,935         11,762
   Maintenance                                        3,824          4,233
   Depreciation and amortization                      9,281          8,392
   Income taxes                                      13,510          8,426
   Property and other taxes                           3,940          3,707
                                              -------------  -------------
      Total operating expenses                      104,940         96,316
                                              -------------  -------------
      Net operating income                           26,762         17,535
                                              -------------  -------------
Other income and expenses:
   Non-regulated revenue                              3,805          3,418
   Non-regulated expenses                            (4,501)        (2,136)
   Gain (loss) on sale of non-utility
    property                                              -              -
   Less: income taxes on other income and
    expenses                                            288           (522)
                                              -------------  -------------
                                                       (408)           760
                                              -------------  -------------
Interest expense:
   Interest Expense                                   5,233          4,936
   Less: capitalized interest                        (1,065)          (450)
                                              -------------  -------------
      Net interest expense                            4,168          4,486
                                              -------------  -------------
Net income                                    $      22,186  $      13,809
                                              =============  =============
Earnings per share
   Basic                                      $        1.06  $        0.67
                                              =============  =============
   Diluted                                    $        1.06  $        0.67
                                              =============  =============
Weighted average shares outstanding
   Basic                                             20,717         20,667
                                              =============  =============
   Diluted                                           20,740         20,691
                                              =============  =============
Dividends per share of common stock           $      0.2925  $      0.2900
                                              =============  =============
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Nine-Months ended:
                                              September 30,  September 30,
                                                  2008           2007
                                              -------------  -------------
Operating revenue                             $     310,204  $     281,203
                                              -------------  -------------
Operating expenses:
   Water production costs                           112,162        108,147
   Admistrative and General                          42,249         41,568
   Other operations                                  37,766         33,857
   Maintenance                                       12,884         13,983
   Depreciation and amortization                     27,779         25,173
   Income taxes                                      20,126         13,761
   Property and other taxes                          11,163         10,548
                                              -------------  -------------
      Total operating expenses                      264,129        247,037
                                              -------------  -------------
      Net operating income                           46,075         34,166
                                              -------------  -------------
Other income and expenses:
   Non-regulated revenue                              9,452          9,883
   Non-regulated expenses                            (9,715)        (5,853)
   Gain (loss) on sale of non-utility
    property                                              7            (83)
   Less: income taxes on other income and
    expenses                                            118         (1,608)
                                              -------------  -------------
                                                       (138)         2,339
                                              -------------  -------------
Interest expense:
   Interest Expense                                  15,405         14,788
   Less: capitalized interest                        (1,955)        (1,400)
                                              -------------  -------------
      Net interest expense                           13,450         13,388
                                              -------------  -------------
Net income                                    $      32,487  $      23,117
                                              =============  =============
Earnings per share
   Basic                                      $        1.55  $        1.11
                                              =============  =============
   Diluted                                    $        1.55  $        1.11
                                              =============  =============
Weighted average shares outstanding
   Basic                                             20,707         20,664
                                              =============  =============
   Diluted                                           20,731         20,688
                                              =============  =============
Dividends per share of common stock           $      0.8775  $      0.8700
                                              =============  =============

Contact:
Marty Kropelnicki
(408) 367-8200 (analysts)

Shannon Dean
(310) 257-1435 (media)

SOURCE: California Water Service Group