Cal Water Receives Authorization to Recover $5.4 Million in Higher Electricity Costs from 2001.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--May 9, 2003

California Water Service Group (Cal Water) (NYSE:CWT) announced today that it has received authorization from the California Public Utilities Commission (Commission) to recover $5.4 million in higher costs, primarily due to increases in power rates, incurred in eight of its operating districts prior to November 29, 2001; the $5.4 million will be recovered over the next 12 to 24 months through surcharges on ratepayer bills.

For two decades, water utilities were allowed to recover significant increases in certain unpredictable and uncontrollable costs, such as the costs of purchased water and electricity used to operate wells and pumps. These costs had been tracked in balancing accounts and recovered in customers' water rates. On November 29, 2001, the Commission abruptly changed its procedure and suspended balancing accounts.

The Commission's current decision allows Cal Water to recover balancing accounts existing for eight districts at the time of the change in procedure, much of which results from an overall 48% increase in electricity costs that became effective in 2001. It also defers balancing account recovery for four other districts to the General Rate Case process. Balancing account-related decisions for remaining districts are expected to result in a net ratepayer refund in the range of $200,000 to $300,000. The actual net effect will be determined by future Commission decisions.

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, 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 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: 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. 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.