Exhibit 10.40

                         CALIFORNIA WATER SERVICE GROUP
                            STOCK OPTION GRANT NOTICE
                              EQUITY INCENTIVE PLAN

California Water Service Group (the "Company"), pursuant to its Equity Incentive
Plan (the  "Plan"),  hereby  grants to  Optionholder  an option to purchase  the
number of shares of the Company's Common Stock set forth below ("Shares").  This
option is subject to all of the terms and  conditions as set forth herein and in
the Stock Option  Agreement,  the Plan and the Notice of Exercise,  all of which
are attached hereto and incorporated herein in their entirety.

Optionholder:
                                           -------------------------------------
Date of Grant:
                                           -------------------------------------

Vesting Commencement Date:
                                           -------------------------------------
Number of Shares Subject to Option:
                                           -------------------------------------
Exercise Price (Per Share):
                                           -------------------------------------
Total Exercise Price:
                                           -------------------------------------
Expiration Date:
                                           -------------------------------------

Type of Grant:     [ ]  Incentive Stock Option(1)
                   [ ]  Nonstatutory Stock Option

Exercise Schedule:      Same as Vesting Schedule

Vesting Schedule:  [ ]  100% of the Shares vest ___ years after the
                        Vesting Commencement Date

                   [ ]  The Shares vest annually over ___ years after the
                        Vesting Commencement Date

                   [ ]  The Shares vest quarterly over ___ years after the
                        Vesting Commencement Date

                   [ ]  The Shares vest monthly over ___ years after the
                        Vesting Commencement Date

                   [ ]  ___% of the Shares vest on the first anniversary of
                        the Vesting Commencement Date; thereafter, the Shares
                        vest  monthly  quarterly  annually, over ___ years

               Vesting is contingent  upon  completion  of  Continuous  Service;
               annual, quarterly or monthly vesting is at an equal rate over the
               vesting period.

Payment:      By one or a combination of the following  items  (described in the
              Stock Option Agreement):  (i) by cash or check, (ii) pursuant to a
              Regulation  T Program  if the  Shares  are  publicly,  or (iii) by
              delivery of already-owned shares if the Shares are publicly traded

Additional  Terms/Acknowledgements:  The undersigned  Optionholder  acknowledges
receipt of, and understands  and agrees to, this Grant Notice,  the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date of
Grant, this Grant Notice,  the Stock Option Agreement and the Plan set forth the
entire  understanding   between  Optionholder  and  the  Company  regarding  the
acquisition  of stock in the  Company and  supersede  all prior oral and written
agreements on that subject with the exception of (i) options  previously granted
and delivered to Optionholder under the Plan, and (ii) the following  agreements
only:

         OTHER AGREEMENTS:


CALIFORNIA WATER SERVICE GROUP                            OPTIONHOLDER:

By:
   -----------------------------------       -----------------------------------
          Signature                                      Signature

Title:                                  Date:
   -----------------------------------       -----------------------------------
Date:

ATTACHMENTS:  Stock  Option  Agreement,  Equity  Incentive  Plan,  and Notice of
Exercise

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(1) If this is an  incentive  stock  option,  it (plus  your  other  outstanding
incentive stock options)  cannot be first  exercisable for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonstatutory stock option.