California Water Service Group Announces Results for 3rd Quarter 2009

SAN JOSE, CA--(Marketwire - October 28, 2009) - California Water Service Group (NYSE: CWT) today announced net income of $19.6 million and earnings per share of $0.94 for the third quarter of 2009, compared to net income of $22.2 million and earnings per share of $1.06 in the third quarter of 2008.

Revenues increased by $7.5 million, or 6%, to $139.2 million, with rate increases adding $12.5 million and water usage by new customers adding $3.3 million. A decrease in water usage by existing customers and other charges reduced revenue by $8.3 million.

Total operating expenses for the third quarter of 2009 increased by $10.1 million, or 10%, to $115.1 million. Water production costs increased by $2.4 million, or 5%, due to higher power costs and wholesale water rates. Administrative costs increased $4.1 million, or 27%, due to increased pension & benefits costs, and increased legal costs. Other operations expenses increased by $1.7 million to $14.6 million as a result of higher costs for pumping and distributing water.

Maintenance expense increased by 15% to $4.4 million as a result of additional water main repairs. Depreciation expense increased by 11% to $10.3 million as a result of increases in capital expenditures. Taxes other than income increased $0.4 million to $4.4 million, primarily due to property tax increases.

Other income, net of income taxes, added $1.0 million of net income for the quarter, while interest expense increased by 33% to $5.5 million due to the new debt offering in April 2009.

For the twelve months ended September 30, 2009, net income was $41.4 million and diluted earnings per share were $1.99, compared to net income of $40.5 million and diluted earnings per share of $1.94 for the same period last year. Revenues for the trailing twelve months were $443 million, compared to $396 million for the same period in the prior year.

"During the quarter, the Company filed its 2009 General Rate Case for all 24 California districts and corporate costs," said President and Chief Executive Officer Peter C. Nelson. "This is significant because we are now filing for rate relief in California for all regulated districts and corporate costs at the same time, which will allow for more timely rate relief of prudently incurred costs," said Nelson.

"While we cannot predict the outcome of this filing, the rate case was filed on time and is currently proceeding on schedule," Nelson said.

Other Information

All stockholders and interested investors are invited to listen to the 2009 third quarter conference call on October 29, 2009, at 11:00 a.m. (EST), by dialing 1-866-814-8476 and keying in ID# 1399873. A replay of the call will be available from 2:00 p.m. (EST) October 29, 2009, through December 28, 2009, at 1-888-266-2081, ID# 1399873. 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. 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,
                                                   2009          2008
                                              -------------  -------------
ASSETS

Utility plant:
 Utility plant                                $   1,676,287  $   1,583,079
 Less accumulated depreciation and
  amortization                                     (501,704)      (470,712)
                                              -------------  -------------
  Net utility plant                               1,174,583      1,112,367
                                              -------------  -------------
Current assets:
 Cash and cash equivalents                           47,581         13,869
 Receivables:
  Customers                                          31,722         22,786
  Regulatory balancing accounts                      15,592          4,629
  Other                                              10,752          7,442
 Unbilled revenue                                    21,352         13,112
 Materials and supplies at average cost               5,457          5,070
 Taxes, prepaid expenses and other assets             7,922         12,890
                                              -------------  -------------
   Total current assets                             140,378         79,798
                                              -------------  -------------
Other assets:
 Regulatory assets                                  201,442        198,293
 Goodwill                                             2,615          3,906
 Other assets                                        30,456         23,743
                                              -------------  -------------
  Total other assets                                234,513        225,942
                                              -------------  -------------
                                              $   1,549,474  $   1,418,107
                                              =============  =============
CAPITALIZATION AND LIABILITIES

Capitalization:
 Common stock, $.01 par value                 $         207  $         207
 Additional paid-in capital                         214,715        213,922
 Retained earnings                                  204,570        188,820
                                              -------------  -------------
  Total common stockholders' equity                 419,492        402,949
 Long-term debt, less current maturities            373,541        287,498
                                              -------------  -------------
  Total capitalization                              793,033        690,447
                                              -------------  -------------
Current liabilities:
 Current maturities of long-term debt                12,424          2,818
 Short-term borrowings                               12,000         40,000
 Accounts payable:
  Trade and other                                    46,894         39,187
  Regulatory balancing accounts                       7,486          2,585
 Accrued interest                                     9,096          3,295
 Accrued expenses and other liabilities              42,938         35,311
                                              -------------  -------------
  Total current liabilities                         130,838        123,196
Unamortized investment tax credits                    2,392          2,392
Deferred income taxes, net                           83,512         72,344
Pension and postretirement benefits other
 than pensions                                      152,467        152,685
Regulatory and other liabilities                     83,357         83,312
Advances for construction                           182,763        176,163
Contributions in aid of construction                121,112        117,568
Commitments and contingencies                            --             --
                                              -------------  -------------
                                              $   1,549,474  $   1,418,107
                                              =============  =============


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited
(In thousands, except per share data)

                                              September 30,  September 30,
For the three months ended                         2009           2008
                                              -------------  -------------
Operating revenue                             $     139,167  $     131,702
                                              -------------  -------------
Operating expenses:
 Operations:
  Water production costs                             48,898         46,455
  Administrative and general                         19,084         14,995
  Other operations                                   14,639         12,935
 Maintenance                                          4,405          3,824
 Depreciation and amortization                       10,259          9,281
 Income taxes                                        13,417         13,510
 Property and other taxes                             4,371          3,940
                                              -------------  -------------
  Total operating expenses                          115,073        104,940
                                              -------------  -------------
  Net operating income                               24,094         26,762
                                              -------------  -------------
Other income and expenses:
 Non-regulated revenue                                5,194          3,805
 Non-regulated expenses, net                         (3,464)        (4,501)
 Gain on sale of non-utility property                     -              -
 Income taxes (expense) benefit on other
  income and expenses                                  (702)           288
                                              -------------  -------------
  Net other income and expenses                       1,028           (408)
                                              -------------  -------------
Interest expense:
 Interest expense                                     6,480          5,233
 Less: capitalized interest                            (950)        (1,065)
                                              -------------  -------------
  Net interest expense                                5,530          4,168
                                              -------------  -------------
Net income                                    $      19,592  $      22,186
                                              =============  =============
Earnings per share
 Basic                                        $        0.94  $        1.06
                                              =============  =============
 Diluted                                      $        0.94  $        1.06
                                              =============  =============
Weighted average shares outstanding
 Basic                                               20,745         20,717
                                              =============  =============
 Diluted                                             20,767         20,740
                                              =============  =============
Dividends declared per share of common stock  $      0.2950  $      0.2925
                                              =============  =============


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited
(In thousands, except per share data)

                                              September 30,  September 30,
For the nine months ended                          2009           2008
                                              -------------  -------------
Operating revenue                             $     342,447  $     310,204
                                              -------------  -------------
Operating expenses:
 Operations:
   Water production costs                           119,468        112,162
   Administrative and general                        57,331         42,248
   Other operations                                  41,425         37,766
 Maintenance                                         13,352         12,884
 Depreciation and amortization                       30,739         27,779
 Income taxes                                        21,438         20,127
 Property and other taxes                            12,371         11,163
                                              -------------  -------------
  Total operating expenses                          296,124        264,129
                                              -------------  -------------
  Net operating income                               46,323         46,075
                                              -------------  -------------
Other income and expenses:
 Non-regulated revenue                               11,173          9,452
 Non-regulated expenses, net                         (6,826)        (9,715)
 Gain on sale of non-utility property                   675              7
 Income taxes (expense) benefit on other
  income and expenses                                (2,032)           118
                                              -------------  -------------
  Net other income and expense                        2,990           (138)
                                              -------------  -------------
Interest expense:
 Interest expense                                    17,480         15,405
 Less: capitalized interest                          (2,270)        (1,955)
                                              -------------  -------------
  Net interest expense                               15,210         13,450
                                              -------------  -------------
Net income                                    $      34,103  $      32,487
                                              =============  =============
Earnings per share
 Basic                                        $        1.64  $        1.55
                                              =============  =============
 Diluted                                      $        1.64  $        1.55
                                              =============  =============
Weighted average shares outstanding
 Basic                                               20,740         20,707
                                              =============  =============
 Diluted                                             20,765         20,731
                                              =============  =============
Dividends declared per share of common stock  $      0.8850  $      0.8775
                                              =============  =============


1720 North First Street
San Jose, CA 95112-4598

Contact Information: Contact: Marty Kropelnicki (408) 367-8200 (analysts) Shannon Dean (310) 257-1435 (media)