Press Release

California Water Service Group Announces First Quarter 2009 Results

SAN JOSE, CA, Apr 29, 2009 (MARKET WIRE via COMTEX) -- California Water Service Group (NYSE: CWT) today announced net income of $2.4 million and earnings per share of $0.12 for the first quarter of 2009, compared to net income of $0.2 million and earnings per share of $0.01 for the first quarter of 2008.

Revenues increased by $13.7 million, or 19%, to $86.6 million, with rate increases adding $11.6 million and sales to new customers adding $2.4 million. A decrease in usage and other changes in revenue of $5.3 million were partially offset by an increase in revenue of $5.0 million due to the net increase of the Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA) that went into effect July 1, 2008.

Total operating expenses for the first quarter of 2009 increased $12.2 million, or 18%, to $80.3 million. Water production costs increased $3.5 million, or 14%, due to increased purchased water costs and higher power costs. Administrative costs increased $5.4 million, or 41%, to $18.9 million, mainly due to higher benefit and legal expenses. Other production expenses increased $0.4 million, or 3%, to $12.5 million, as a result of increases in expenses for pumping and transmission & distribution.

Maintenance expense increased 13%, or $0.5 million, to $4.6 million during the quarter, primarily due to increased spending on main repairs. Depreciation expense increased $1.0 million, or 11%, to $10.2 million due to increases in utility plant in 2008. Taxes other than income increased $0.3 million, or 9%, to $4.1 million, primarily due to increases for property tax paid in the first quarter.

Other income, net of income taxes, increased $0.6 million primarily due to a property sale during the quarter -- there were no property sales in the first quarter of 2008.

On April 17, 2009, California Water Service Company completed an offering of $100 million in aggregate principal amount of its 5.875% First Mortgage Bonds due 2019, Series LL. Cal Water plans to use a portion of the net proceeds from the sale of the bonds to pay down outstanding short-term borrowings, and use the remainder of the proceeds to fund capital projects scheduled for 2009.

On April 8, 2009, Standard & Poor's Rating Services assigned it "AA-" secured debt rating and "1+" recovery rating to California Water Service Company's First Mortgage Bonds. At the same time, Standard & Poor's affirmed its "A+" corporate credit rating on the Company. "We were pleased to complete the debt offering and to receive the 'AA-' rating on the $100 million First Mortgage Bonds," said President and Chief Executive Officer Peter C. Nelson. "While the credit markets have been extremely volatile, the demand for Cal Water's bonds was strong, and the 'AA-' rating further shows the financial strength of our Company," Nelson said.

Nelson further noted that during the first quarter the Company has been preparing the 2009 general rate case (GRC) for Cal Water. It will be the first time in the Company's history that it files for all 24 regulated districts plus general office in the same proceeding. In addition to the GRC filing, the Company is stepping up its water efficiency program. With WRAM and MCBA in place, the Company can aggressively pursue water efficiency programs and better support the State of California water efficiency goals.

All stockholders and interested investors are invited to listen to the 2009 first quarter conference call on April 30, 2009, at 11:00 a.m. (EDT), by dialing 1-866-847-7859 and keying in ID# 1347470. A replay of the call will be available from 2:00 p.m. (EDT) Thursday, April 30, 2009, through June 29, 2009, at 888-266-2081, ID# 1347470. 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

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., and CWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in 100 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

(In thousands, except per share data)               March 31   December 31
                                                      2009         2008
                                                  -----------  -----------
Utility plant:
     Utility plant                                $ 1,605,014  $ 1,583,079
     Less accumulated depreciation and
      amortization                                   (482,235)    (470,712)
                                                  -----------  -----------
          Net utility plant                         1,122,779    1,112,367
                                                  -----------  -----------
Current assets:
     Cash and cash equivalents                          5,278       13,869
          Customers                                    18,216       22,786
          Other                                        19,006       12,071
     Unbilled revenue                                  12,472       13,112
     Materials and supplies at average cost             5,068        5,070
     Taxes, prepaid expense, and other assets          12,265       12,890
                                                  -----------  -----------
          Total current assets                         72,305       79,798
                                                  -----------  -----------
Other assets:
     Regulatory assets                                198,170      198,293
     Goodwill                                           3,906        3,906
     Other assets                                      25,148       26,743
                                                  -----------  -----------
          Total other assets                          227,224      228,942
                                                  -----------  -----------
                                                  $ 1,422,308  $ 1,421,107
                                                  -----------  -----------
     Common stock, $.01 par value                 $       207  $       207
     Additional paid-in capital                       214,236      213,922
     Retained earnings                                185,128      188,820
                                                  -----------  -----------
          Total common stockholders' equity           399,571      402,949
     Preferred stock                                        -            -
     Long-term debt, less current maturities          287,202      287,498
                                                  -----------  -----------
          Total capitalization                        686,773      690,447
                                                  -----------  -----------
Current liabilities:
     Current maturities of long-term debt               2,891        2,818
     Accounts payable                                  37,988       41,772
     Notes payable                                     52,000       40,000
     Accrued expenses and other liabilities            37,195       38,606
                                                  -----------  -----------
          Total current liabilities                   130,074      123,196
Unamortized investment tax credits                      2,392        2,392
Deferred income taxes, net                             74,283       72,344
Regulatory liability and other                         83,234       83,312
Pension and postretirement benefits other than
 pensions                                             150,074      152,685
Advances for construction                             177,684      176,163
Contributions in aid of construction                  117,794      117,568
Commitments and contingencies
                                                  -----------  -----------
                                                  $ 1,422,308  $ 1,418,107
                                                  -----------  -----------
(In thousands, except per share data)
For the three months ended:
                                                      March 31,  March 31,
                                                        2009       2008
                                                      ---------  ---------
Operating revenue                                     $  86,613  $  72,921
                                                      ---------  ---------
Operating expenses:
    Water production costs                               28,868     25,358
    Admistrative and General                             18,861     13,418
    Other operations                                     12,456     12,065
    Maintenance                                           4,635      4,114
    Depreciation and amortization                        10,198      9,222
    Income taxes                                          1,232        174
    Property and other taxes                              4,088      3,739
                                                      ---------  ---------
        Total operating expenses                         80,338     68,090
                                                      ---------  ---------
        Net operating income                              6,275      4,831
                                                      ---------  ---------
Other income and expenses:
    Non-regulated revenue                                 2,881      2,905
    Non-regulated expenses                               (2,641)    (3,036)
    Gain on sale of non-utility property                    603          -
    Less: income tax (expense) benefit on other
     income and expenses                                   (338)        49
                                                      ---------  ---------
                                                            505        (82)
                                                      ---------  ---------
Interest expense:
    Interest expense                                      5,038      5,014
    Less: capitalized interest                             (679)      (450)
                                                      ---------  ---------
        Total interest expense                            4,359      4,564
                                                      ---------  ---------
Net income                                            $   2,421  $     185
                                                      =========  =========
Earnings per share
    Basic                                             $    0.12  $    0.01
                                                      =========  =========
    Diluted                                           $    0.12  $    0.01
                                                      =========  =========
Weighted average shares outstanding
    Basic                                                20,730     20,688
                                                      =========  =========
    Diluted                                              20,759     20,711
                                                      =========  =========
Dividends per share of common stock                   $ 0.29500  $ 0.29250
                                                      ---------  ---------

Marty Kropelnicki
(408) 367-8200 (analysts)

Shannon Dean
(310) 257-1435 (media)

1720 North First Street
San Jose, CA 95112-4598

SOURCE: California Water Service Group