Cal Water Announces Standard and Poor's Decision to Lower Credit Rating.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 6, 2002

Standard and Poor's today announced its decision to lower its corporate credit rating on California Water Service Company (Cal Water) to single-`A' plus (A+) from double-`A'-minus (AA-), classifying Cal Water's outlook as "stable." California Water Service Company (Cal Water) is the largest subsidiary of California Water Service Group (NYSE:CWT).

In its news release, Standard and Poor's stated that the change "has been caused principally by deterioration in regulatory support from the California Public Utilities Commission (CPUC)," noting that requests for recovery of reasonable expenses have been delayed as much as 18 months.

"Cal Water has responded proactively to the current regulatory climate, filing rate cases more aggressively and supporting passage of Assembly Bill 2838, a bill intended to protect water utilities from loss caused by regulatory delays. But the unfair regulatory treatment we have received in the past few years has taken its toll, and that is reflected in Standard and Poor's decision," said Chief Financial Officer Gerald F. Feeney.

Although Standard and Poor's views recent regulatory problems as "cause for concern," it does not yet consider them to be problems that cause "a material shift in the company's overall business risk."

California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, and CWS Utility Services. The subsidiaries provide regulated and non-regulated water service to over 1.7 million people in 98 communities. The Company's common stock trades on the New York Stock Exchange under the symbol "CWT".

This news release contains forward-looking statements intended to qualify for "safe harbor" within the meaning of the Federal securities laws as established by the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available information, expectations, estimates, assumptions and projections, and management's judgment about California Water Service Group, the water utility industry and general economic conditions. Words such as "expects," "intends," "plans," "believes," "estimates," "anticipates" 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. Actual results may vary materially from what is contained in a forward-looking statement. Factors which may cause a result different than expected or anticipated include: governmental and regulatory commissions' decisions, changes in regulatory commissions' policies or procedures, the timeliness of regulatory commissions' actions concerning rate relief, new legislation, electric power interruption, increases in suppliers' prices and the availability of supplies, changes in environmental compliance requirements, acquisitions, the ability to successfully implement business plans, changes in customer water use patterns and the impact of weather on operating results, especially as it impacts water sales. The Company assumes no obligation to provide public updates of forward-looking statements.

Additional information is available at the Company's web site at www.calwater.com.