Cal Water Announces Second Quarter 2007 Results and Company Declares 251st Consecutive Quarterly Dividend

California Water Service Group (NYSE:CWT) today announced net income of $7.7 million and earnings per common share of $0.37 for the second quarter of 2007, compared to net income of $5.7 million and earnings of $0.31 per common share in the second quarter of 2006. Revenues increased by $14.7 million, or 18%, to $95.8 million, benefiting from a $9.9 million increase in water sales to existing customers, a $4.0 million increase in rates, and $0.8 million in sales to new customers. Total operating expenses for the second quarter of 2007 increased by $12.9 million, or 18%, to $84.4 million. Included in this category is a $7.1 million increase in water production costs, due largely to the increase in customer water usage and higher costs for wholesale water purchases. Other operations expenses increased $1.9 million, or 8%, to $25.3 million, due partially to an increase of $0.7 million in outside services for various initiatives, including preparation for the 2007 General Rate Case; $0.3 million for California Public Utilities Commission fees, which are based upon revenues; and an increase of $0.2 million in general payroll increases that took effect January 2007. Maintenance expense increased by $1.8 million, or 53%, to $5.2 million for the quarter, due to an increase in repairs to water mains and services. Depreciation expense increased $0.7 million, or 10%, to $8.4 million, as a result of increases in 2006 utility plant. Property and taxes other than income taxes increased $0.4 million, or 13%, to $3.4 million, as a result of higher franchise fees and property taxes, while total income taxes increased $1.3 million, or 32%, to $5.4 million because of higher pre-tax income. Other income increased $0.4 million, or 88%, to $0.8 million, mainly due to interest on short-term and other investments. There were no property sales in the second quarter of 2007, compared to property sales of $0.3 million in the second quarter of 2006. For the six months ended June 30, 2007, net income increased $2.8 million, or 42%, to $9.3 million, compared to $6.5 million for the same period in the previous year. Earnings per share increased $0.10, or 27%, to $0.45, compared to $0.35 for the same period. Revenues for the six months increased $21.0 million, or 14%, to $167.4 million, compared to $146.3 million for the same period in the previous year. "Continuing dry weather boosted our revenues in the second quarter of 2007, as did our continued efforts to improve the process to recover cost increases in water rates,” said Peter C. Nelson, President and Chief Executive Officer. Nelson noted that during the quarter, the company prepared its 2007 General Rate Case (GRC) for its company headquarters and eight districts. As part of this filing, the company requested that it be allowed to recover certain corporate costs associated with health care and employee welfare programs, Sarbanes-Oxley compliance, and general administration expenses. If the company headquarters or centralized services application is approved and adopted by the Commission, Cal Water will be allowed to recover these costs across all districts at once, thus greatly reducing the delay in recovery that occurred previously when company headquarters costs were phased into rates only as districts filed separate General Rates Cases on a three-year schedule. Among the programs proposed by Cal Water in the centralized services filing were additional programs to promote conservation. "We share the Commission’s commitment to encouraging wise water use, and with the recent dry weather, our conservation efforts are more important than ever,” Nelson said. At their meeting on July 25, 2007, the Directors of California Water Service Group (NYSE:CWT) declared the Company's 251st consecutive quarterly dividend on common stock. The quarterly dividend of $0.2900 will be payable on August 17, 2007, to stockholders of record on August 6, 2007. The Board also declared a regular dividend on Series C preferred stock. All stockholders and interested investors are invited to listen to the 2007 second quarter conference call on August 2, 2007, at 11:00 a.m. (EDT), by dialing 1-866-253-5757 and keying in ID# 1100221. A replay of the call will be available from 2:00 p.m. (EDT) on August 2, 2007, through October 1, 2007, at 888-266-2081, ID# 1100221. The call, which will be hosted by President and Chief Executive Officer Peter C. 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., and CWS Utility Services. Together these companies provide regulated and non-regulated water service to more than 2 million people in 100 California, Washington, New Mexico, and Hawaii communities. The 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) June 30 December 31   2007     2006   ASSETS Utility plant: Utility plant $ 1,394,883 $ 1,344,415 Less accumulated depreciation and amortization   (420,321 )   (402,940 ) Net utility plant   974,562     941,475     Current assets: Cash and cash equivalents 29,842 60,312 Receivables Customers 23,050 19,526 Other 6,134 6,700 Unbilled revenue 14,698 11,341 Materials and supplies at average cost 4,742 4,515 Prepaid pension expense - 1,696 Taxes and other prepaid expenses   5,587     5,534   Total current assets   84,053     109,624     Other assets: Regulatory assets 93,861 93,785 Other assets   22,008     20,135   Total other assets   115,869     113,920   $ 1,174,484   $ 1,165,019     CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value $ 207 $ 207 Additional paid-in capital 211,681 211,513 Retained earnings   163,830     166,582   Total common stockholders' equity 375,718 378,302 Preferred stock 3,475 3,475 Long-term debt, less current maturities   291,299     291,814   Total capitalization   670,492     673,591     Current liabilities: Current maturities of long-term debt 1,778 1,778 Accounts payable 37,988 33,130 Accrued expenses and other liabilities   32,503     35,317   Total current liabilities 72,269 70,225   Unamortized investment tax credits 2,541 2,541 Deferred income taxes, net 69,472 69,503 Pension and postretirement benefits other than pensions 48,584 48,584 Regulatory and other liabilities 33,629 33,411 Advances for construction 165,819 157,660 Contributions in aid of construction 111,678 109,504 Commitments and contingencies     $ 1,174,484   $ 1,165,019   CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In thousands, except per share data)   For the three months ended: June 30, June 30,   2007     2006     Operating revenue $ 95,782   $ 81,102   Operating expenses: Water production costs 37,271 30,210 Other operations 25,274 23,399 Maintenance 5,241 3,432 Depreciation and amortization 8,380 7,640 Income taxes 4,792 3,753 Property and other taxes   3,435     3,045   Total operating expenses   84,393     71,479     Net operating income   11,389     9,623     Other income and expenses: Non-regulated revenue 3,423 2,206 Non-regulated expenses (1,966 ) (1,800 ) Gain (loss) on sale of non-utility property (83 ) 323 Less: income taxes on other income and expenses   (560 )   (297 )   814     432     Interest expense: Interest Expense 4,926 4,970 Less: capitalized interest   (450 )   (625 ) Net interest expense   4,476     4,345     Net income $ 7,727   $ 5,710     Earnings per share Basic $ 0.37   $ 0.31   Diluted $ 0.37   $ 0.31   Weighted average shares outstanding Basic   20,666     18,407   Diluted   20,690     18,427   Dividends per share of common stock $ 0.2900   $ 0.2875         CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In thousands, except per share data)   For the six months ended: June 30, June 30,   2007     2006     Operating revenue $ 167,352   $ 146,318   Operating expenses: Water production costs 63,084 51,639 Other operations 48,930 47,187 Maintenance 9,750 7,330 Depreciation and amortization 16,781 15,349 Income taxes 5,336 4,041 Property and other taxes   6,840     6,221   Total operating expenses   150,721     131,767     Net operating income   16,631     14,551     Other income and expenses: Non-regulated revenue 6,465 4,355 Non-regulated expenses (3,717 ) (3,339 ) Gain (loss) on sale of non-utility property (83 ) 348 Less: income taxes on other income and expenses   (1,086 )   (556 )   1,579     808     Interest expense: Interest Expense 9,852 9,667 Less: capitalized interest   (950 )   (850 ) Net interest expense   8,902     8,817     Net income $ 9,308   $ 6,542     Earnings per share Basic $ 0.45   $ 0.35   Diluted $ 0.45   $ 0.35   Weighted average shares outstanding Basic   20,663     18,404   Diluted   20,687     18,427   Dividends per share of common stock $ 0.5800   $ 0.5750