Connecticut Water Enters into Water Supply Agreement with South Central Connecticut Regional Water Authority.

CLINTON, Conn. -- Connecticut Water Service Inc. (NASDAQ:CTWS) announced today that it has reached an agreement with the South Central Connecticut Regional Water Authority (RWA) in New Haven to purchase up to one million gallons of water to serve customers on its Guilford Water System, through an interconnection in the town of Guilford.

Connecticut Water's Guilford Water System serves 14,400 customers or about 50,400 people in Guilford, Madison, Clinton, Westbrook and Old Saybrook. The Company has been engaged in other water supply projects for the Guilford System including a recently completed $5 million improvement to the Company's Killingworth Reservoir Dam, which has created a 60 percent increase in water storage capacity of the reservoir. The RWA agreement and Killingworth Dam project will improve service and reliability as well as provide additional flexibility in meeting the water supply needs of the Guilford System.

According to Thomas R. Marston, Connecticut Water's vice president, Planning and Treatment, the agreement with RWA is a cost efficient means of adding additional supply. "This agreement allows us to reserve water supply capacity to meet the needs of future generations. It would have cost Connecticut Water significantly more to develop and obtain the necessary permits for new sources of supply or to increase the capacity of existing sources to have access to an additional one million gallons of water per day. Despite the fact that the Guilford System has a significant increase in population every summer and high summer peak demands, we are confident that we have addressed the water supply needs for this system for decades to come," said Marston.

The agreement has been approved by RWA's five member Authority. The initial term of the agreement is 50 years with options to renew in 20-year increments thereafter.

The water supply agreement is subject to the review and approval by the Connecticut Department of Public Utility Control. In order to access the full capacity allowed in the agreement, permits will be needed from the Connecticut Department of Public Health and the Department of Environmental Protection and Connecticut Water will need to construct a pump station.

Connecticut Water Service, Inc. is the largest, domestic-based, investor-owned water utility in New England. It provides water to over 80,000 customers in 41 towns in Connecticut, as well as providing water-related services under contract in municipalities and companies.

This press release may contain certain forward-looking statements regarding the Company's results of operations and financial position. These forward-looking statements are based on current information and expectations, and are subject to risks and uncertainties, which could cause the Company's actual results to differ materially from expected results.

Our water companies are subject to various federal and state regulatory agencies concerning water quality and environmental standards. Generally, the water industry is materially dependent on the adequacy of approved rates to allow for a fair rate of return on the investment in utility plant. The ability to maintain our operating costs at the lowest possible level while providing good quality water service is beneficial to customers and stockholders. Profitability is also dependent on the timeliness of rate relief, when necessary, and numerous factors over which we have little or no control, such as the quantity of rainfall and temperature, industrial demand, financing costs, energy rates, tax rates, stock market trends which may affect the return earned on pension assets, and compliance with environmental and water quality regulations. The profitability of our other revenue sources is subject to the amount of land we have available for sale and/or donation, the demand for the land, the continuation of the current state tax benefits relating to the donation of land for open space purposes, regulatory approval of land dispositions, the demand for telecommunications antenna site leases and the successful extensions and expansion of our service contract work. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.