Cal Water Reports Third Quarter 2007 Results and Announces 252nd Consecutive Quarterly Dividend

California Water Service Group (NYSE:CWT) today announced net income of $13.8 million and earnings per common share of $0.67 for the third quarter of 2007, compared to net income of $12.6 million and earnings of $0.68 per common share in the third quarter of 2006. Earnings per share decreased in the third quarter of 2007 by approximately $0.08 per common share on a diluted basis as a result of the equity offering completed in October 2006. Revenues increased by $6.1 million, or 6%, to $113.9 million, compared to the same quarter of 2006, benefiting from a $5.1 million increase in rates, a $0.8 million increase in sales to new customers, and a $0.2 million increase in water sales to existing customers. Total operating expenses for the third quarter of 2007 increased by $4.6 million, or 5%, to $96.3 million compared to the same quarter of 2006. Other operations expenses increased $2.7 million, or 12%, to $26.5 million compared to the same period last year. Contributing to this amount were increases in outside services, such as legal and consulting fees and employee benefit programs (medical and pension benefit costs). Maintenance expenses were $4.2 million, unchanged from the same period last year. Depreciation expense increased $0.7 million, or 9%, to $8.4 million due to 2006 capital expenditures, compared to the third quarter of 2006. Taxes other than income taxes increased $0.2 million, or 7%, to $3.7 million. Total income taxes remained the same as last year and net other income increased approximately $0.3 million. "Typically, our third quarter financial performance benefits from higher water sales due to the warmer weather, but this year we experienced milder summer weather throughout much of California. Customers also have heeded public calls for water conservation within the state and, as a result, we noticed very minor increases in demand by existing customers,” said President and Chief Executive Officer Peter C. Nelson. "Additionally, although we are currently collecting interim rates associated with our 2006 General Rate Case, they are below what we requested in the rate case proceeding before the Commission. The results of our 2006 GRC are pending final approval from the California Public Utilities Commission and, once approved, we will be able to collect the difference between the interim rates and the final rates approved,” Nelson said. Year-to-Date Results For the nine months ended September 30, 2007, net income increased $4.0 million, or 21%, to $23.1 million, compared to $19.2 million for the same period in the previous year. Earnings per share increased $0.08, or 8%, to $1.11, compared to $1.03 for the same period in 2006. Revenues for the nine months increased $27.1 million, or 11%, to $281.2 million, compared to $254.1 million for the same period in the previous year. The equity offering completed in October 2006 decreased earnings per share by approximately $0.14 per common share on a diluted basis for the nine months ended September 30, 2007. Nelson said that in the fourth quarter, the Company intends to remain focused on working with the Commission to implement the Water Action Plan and finalizing the 2006 General Rate Case. "Going forward, we will continue to manage expenses, pursue strategic growth opportunities, and work on innovative regulatory solutions that benefit our stockholders, customers, and employees,” he said. Dividend Declaration At their meeting on October 24, 2007, the Directors of California Water Service Group declared the 252nd consecutive quarterly dividend on common stock. The quarterly dividend of $0.29 per share will be payable on November 16, 2007, to stockholders of record on November 5, 2007. The Board also declared a regular dividend on Series C preferred stock. Quarterly Earnings Call Information All stockholders and interested investors are invited to listen to the 2007 third quarter conference call on November 1, 2007, at 11:00 a.m. (EDT), by dialing 1-866-225-2976 and keying in ID# 1143157. A replay of the call will be available from 2:00 p.m. (EDT) on November 1, 2007, through December 31, 2007, at 888-266-2081, ID# 1143157. 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 nearly 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) September 30 December 31     2007     2006   ASSETS Utility plant: Utility plant $ 1,420,585 $ 1,344,415 Less accumulated depreciation and amortization   (429,319 )   (402,940 ) Net utility plant   991,266     941,475     Current assets: Cash and cash equivalents 26,491 60,312 Receivables Customers 29,514 19,526 Other 7,549 6,700 Unbilled revenue 14,711 11,341 Materials and supplies at average cost 4,789 4,515 Prepaid pension expense - 1,696 Taxes and other prepaid expenses   5,300     5,534   Total current assets   88,354     109,624     Other assets: Regulatory assets 93,907 93,785 Other assets   22,377     20,135   Total other assets   116,284     113,920   $ 1,195,904   $ 1,165,019     CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value $ 207 $ 207 Additional paid-in capital 211,782 211,513 Retained earnings   171,607     166,582   Total common stockholders' equity 383,596 378,302 Preferred stock 3,475 3,475 Long-term debt, less current maturities   291,051     291,814   Total capitalization   678,122     673,591     Current liabilities: Current maturities of long-term debt 1,832 1,778 Accounts payable 39,086 33,130 Accrued expenses and other liabilities   40,747     35,317   Total current liabilities 81,665 70,225   Unamortized investment tax credits 2,541 2,541 Deferred income taxes, net 69,517 69,503 Pension and postretirement benefits other than pensions 48,584 48,584 Regulatory and other liabilities 33,724 33,411 Advances for construction 167,719 157,660 Contributions in aid of construction 114,032 109,504 Commitments and contingencies     $ 1,195,904   $ 1,165,019   CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In thousands, except per share data)       For the three months ended: September 30, 2007   2007     2006     Operating revenue $ 113,851   $ 107,755   Operating expenses: Water production costs 45,063 43,998 Other operations 26,495 23,756 Maintenance 4,233 4,173 Depreciation and amortization 8,392 7,717 Income taxes 8,426 8,552 Property and other taxes   3,707     3,477   Total operating expenses   96,316     91,673     Net operating income   17,535     16,082     Other income and expenses: Non-regulated revenue 3,418 2,358 Non-regulated expenses (2,136 ) (1,610 ) Gain on sale of non-utility property - - Less: income taxes on other income and expenses   (522 )   (305 )   760     443     Interest expense: Interest Expense 4,936 5,031 Less: capitalized interest   (450 )   (1,125 ) Net interest expense   4,486     3,906     Net income $ 13,809   $ 12,619     Earnings per share Basic $ 0.67   $ 0.68   Diluted $ 0.67   $ 0.68   Weighted average shares outstanding Basic   20,667     18,407   Diluted   20,691     18,424   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 nine months ended: September 30, 2007   2007     2006     Operating revenue $ 281,203   $ 254,072   Operating expenses: Water production costs 108,147 95,637 Other operations 75,425 70,943 Maintenance 13,983 11,503 Depreciation and amortization 25,173 23,066 Income taxes 13,761 12,593 Property and other taxes   10,548     9,698   Total operating expenses   247,037     223,440     Net operating income   34,166     30,632     Other income and expenses: Non-regulated revenue 9,883 6,713 Non-regulated expenses (5,853 ) (4,948 ) Gain on sale of non-utility property (83 ) 348 Less: income taxes on other income and expenses   (1,608 )   (861 )   2,339     1,252     Interest expense: Interest Expense 14,788 14,698 Less: capitalized interest   (1,400 )   (1,975 ) Net interest expense   13,388     12,723     Net income $ 23,117   $ 19,161     Earnings per share Basic $ 1.11   $ 1.03   Diluted $ 1.11   $ 1.03   Weighted average shares outstanding Basic   20,664     18,405   Diluted   20,688     18,426   Dividends per share of common stock $ 0.8700   $ 0.8625