New Mexico Water Service Company Acquires Independent Utility Company, Increasing Its Customer...

BELEN, N.M. -- New Mexico Water Service Company, a subsidiary of California Water Service Group (NYSE:CWT), today announced its completion of the acquisition of the assets of Independent Utility Company, which serves a population of 1,200 through 400 connections located 15 miles east of Albuquerque,

"We're very pleased to have the opportunity to serve these customers, and we look forward to exceeding their expectations by providing excellent service and a reliable supply of high-quality water," said Paul Risso, New Mexico Water Service Company General Manager.

The acquisition was contingent upon approval of the first rate increase in 12 years. According to Risso, the previous rates did not cover the costs of operating the system.

"In the long run, both customers and the utility benefit by having rates accurately reflect the costs of providing the service. That helps ensure that the utility has the ability to make necessary upgrades and provide adequate levels of service," Risso said.

The New Mexico Public Regulation Commission, which regulates the rates, services, terms, and operation of the system, approved the application on May 23, 2006, and the transaction closed on August 8, 2006.

New Mexico Water Service Company paid approximately $500,000 in cash for the assets of the system, including three wells and 340 acre-feet of water rights. The purchase increases the utility customer base by approximately six percent.

New Mexico Water Service Company was formed in 2002 when California Water Service Group acquired the Rio Grande Utility Corporation. Today, New Mexico Water Service Company serves approximately 12,000 people through 7,000 service connections in several communities in Valencia and Sierra County.

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 two million people in 100 California, Washington, New Mexico, and Hawaii communities. 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 California Water Service Group, 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, including decisions relating to ratemaking and also relating to proper disposition of property; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; changes in the political landscape; changes in existing law and introduction of new legislation; changes in, and the accuracy of, accounting valuations and estimates; the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulations on internal controls; increases in suppliers' prices and the availability of uninterrupted supplies including water and electric power; fluctuations in interest rates; changes in environmental compliance and water quality requirements; acquisitions and our ability to successfully integrate acquired companies; our success entering into new, and renewing existing, service contracts with cities, agencies and municipal utility districts; our ability to manage growth; the ability to successfully implement business plans; work stoppages and union issues; loss of key personnel; changes in customer water use patterns; the impact of weather on water sales and operating results; access to sufficient capital on satisfactory terms; natural disasters, civil disturbances or terrorist threats or acts; 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; the reliability of our information technology; litigation with third parties; 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 other risk factors disclosed in the California Water Service Group's 10K's, 10Q's, 8-K's and others filings made by California Water Service Group and on file with the SEC. California Water Service Group assumes no obligation to provide public updates of forward-looking statements.