OPINION OF KPMG LLP

Exhibit 8.1




[KPMG LLP LETTERHEAD]



April 1, 1999

Mr. Gerald F. Feeney
California Water Service Group
1720 North First Street
San Jose, CA 95112-4598

Dear Mr. Feeney:

You have requested the opinion of KPMG LLP (KPMG) regarding certain federal
income tax consequences of the proposed merger of Dominguez Services Corporation
(DSC) with and into California Water Service Company (Water Company), a wholly
owned subsidiary of California Water Services Group (CWSG), for stock of CWSG
(the Merger). Specifically, you have requested us to opine that the form and
substance of the Merger will constitute a reorganization under sections
368(a)(1)(A) and 368(a)(2)(D)1 and to opine on certain federal income tax
consequences to CWSG, Water Company, DSC, and the shareholders of DSC resulting
from the Merger.

SCOPE OF THE OPINION

You have submitted for our consideration certain facts and representations as to
the Merger, which are specifically described below, and a copy of the Agreement
and Plan of Reorganization by and among CWSG, Water Company, and DSC dated as of
November 13, 1998 (the Agreement). Capitalized terms not otherwise defined
herein are intended to have the same meaning as used in the Agreement. Our
opinion is based upon the FACTS AND REPRESENTATIONS set forth in this letter, as
well as the information contained in the Agreement. If any fact or
representation is not entirely complete or accurate, it is imperative that we be
informed immediately in writing because the incompleteness or inaccuracy could
cause us to change our opinion. We have not reviewed all the legal documents
necessary to effectuate the steps to be undertaken and we assume that all steps
will be effectuated under state and federal law and will be consistent with the
Agreement submitted to us.

The opinion contained herein is rendered only with respect to the enumerated
holdings set forth herein under the heading OPINION, and KPMG expresses no
opinion with respect to any other legal, federal, state, or local tax aspect of
the Merger. This opinion is not binding upon the Internal Revenue Service, any
tax authority or any court, and no assurance can be given that a position
contrary to that expressed herein will not be asserted by a tax authority and
ultimately sustained by a court. In rendering our opinion, we are relying upon
the relevant provisions of the Internal Revenue Code of 1986, as amended, the
regulations thereunder, and judicial and administrative


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1 All section references are to the Internal Revenue Code of 1986, and the
regulations thereunder, unless otherwise indicated.




Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 2


interpretations thereof, which are subject to change or modification by
subsequent legislative, regulatory, administrative, or judicial decisions. Any
such changes, which can be retroactive in effect, could also have an effect on
the validity of our opinion. We assume no duty to inform you of any changes in
our opinion due to changes in law and changes in facts that occur subsequent to
the issuance of this letter.

FACTS AND REPRESENTATIONS

As of the date of the Agreement; CWSG is a California corporation. CWSG intends
to reincorporate into Delaware, which reincorporation is anticipated to occur
prior to the effective date of the Merger. The authorized capital stock of CWSG
consists solely of (i) 25,000,000 shares of common stock (CWSG Common Stock), of
which 12,619,140 shares are outstanding, and (ii) 380,000 shares of preferred
stock, of which 139,000 shares of $25 par value cumulative, 4.4% Series C are
outstanding. CWSG owns all of the outstanding stock of Water Company and of CWS
Utility Services.

Water Company is a California corporation. The authorized capital stock of Water
Company consists solely of (i) 8,000,000 shares of common stock, of which
6,309,570 shares are outstanding and owned of record and beneficially by CWSG,
and (ii) 380,000 shares of preferred stock, none of which are outstanding.

DSC is a California corporation. The authorized capital stock of DSC consists
solely of (i) 4,000,000 shares of common stock (DSC Common Stock), of which
1,506,512 shares are outstanding, (ii) 30,000 shares of Class A Preferred Stock,
par value $25 per share, none of which are outstanding, and (iii) 100,000 shares
of Class B Preferred Stock, par value $10 per share, none of which are
outstanding. Approximately 60,624 shares of DSC Common Stock are to be issued
upon consummation of pending acquisitions, which acquisitions are anticipated to
be consummated prior to the Closing. DSC wholly owns Kernville Domestic Water
Company, Arden Water Company, Lakeland Water Company, and Redwood Valley Water
Company, and DSC Investments. DSC also owns a 20 percent equity interest in
Chemical Services Company.

CWSG, Water Company, and DSC represent to KPMG that the following transactions
will be undertaken for valid corporate business purposes:

I. DSC will merge with and into Water Company pursuant to the provisions
of the California General Corporation Law (as previously defined, the
Merger). Pursuant to the Merger, the separate corporate existence of
DSC will terminate and Water Company will be the surviving corporation.

II. At the Effective Time, by virtue of the Merger, each issued and
outstanding share of DSC Common Stock (other than shares as to which
dissenters' rights have been perfected) will be converted into 1.18
shares of CWSG Common Stock, subject to adjustment as specified in
Section 2.3 of the Agreement. If options to acquire DSC Common Stock
which are exerciseable at the date of the Agreement, or become
exerciseable prior to Closing, are


Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 3


exercised prior to the Closing, the shares of DSC Common Stock issued
on such exercise will be converted to the right to receive shares of
CWSG at the Closing.

III. In lieu of issuing fractional shares of CWSG Common Stock, holders of
DSC Common Stock entitled to a fractional share of CWSG Common Stock as
a result of the above exchange ratio will receive an amount in cash as
provided in Section 2.5 of the Agreement.

IV. Holders of DSC Common Stock that take such steps as are necessary to
dissent to the Merger and that are entitled to payment for their shares
will be paid the value of such shares pursuant to California General
Corporation Law.

The following additional representations have been made to KPMG by CWSG, Water
Company, and DSC in connection with the Merger. It is expressly understood and
agreed that KPMG has not independently verified the completeness and accuracy of
any of the following representations and that KPMG is relying on these
representations in rendering the opinions contained herein.

1. The fair market value of the CWSG Common Stock and cash, if any,
received by each DSC shareholder pursuant to the Merger will be
approximately equal to the fair market value of DSC Common Stock
surrendered in the Merger.

2. DSC has not made any distributions to its stockholders or redeemed any
of its stock prior to, and in connection with, the Merger.

3. Water Company will acquire at least 90 percent of the fair market value
of the net assets and at least 70 percent of the fair market value of
the gross assets held by DSC immediately prior to the transaction. For
purposes of this representation, amounts paid by DSC to dissenters,
amounts paid by DSC to shareholders who receive cash or other property,
DSC assets used to pay its reorganization expenses and all redemptions
and distributions (except for regular, normal dividends) made by DSC
immediately preceding the transfer, will be included as assets of DSC
held immediately prior to the transaction.

4. Prior to the transaction, CWSG will be in control of Water Company
within the meaning of section 368(c).

5. Following the transaction, Water Company will not issue additional
shares of its stock that would result in CWSG losing control of Water
Company within the meaning of section 368(c).

6. Neither CWSG nor a person related to CWSG (nor any person acting on
behalf of, as agent for, or as a nominee of CWSG or a person related to
CWSG) has a plan or intention to reacquire any of CWSG Common Stock
issued in the Merger. For this purpose, a related person is as defined
in section 1.368-1(e)(3) of the Treasury Regulations.



Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 4


7. CWSG has no plan or intention to liquidate Water Company; to merge
Water Company with and into another corporation; to sell or otherwise
dispose of the stock of Water Company; or to cause Water Company to
sell or otherwise dispose of any of the assets of DSC acquired in the
transaction, except for (i) dispositions made in the ordinary course of
business, and (ii) transfers described in section 368(a)(2)(C).

8. The liabilities of DSC assumed by Water Company and the liabilities, if
any, to which the transferred assets of DSC are subject were incurred
by DSC in the ordinary course of its business.

9. Following the Merger, Water Company will continue the historic business
of DSC or use a significant portion of DSC historic business assets in
its business.

10. CWSG, Water Company, DSC, and the shareholders of DSC will pay their
respective expenses, if any, incurred in connection with the Merger.

11. There is no intercorporate indebtedness existing between CWSG and DSC
or between Water Company and DSC that was issued, acquired, or will be
settled at a discount.

12. No two parties to the Merger are investment companies as defined in
sections 368(a)(2)(F)(iii) and (iv).

13. DSC is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of section 368(a)(3)(A).

14. The fair market value of the assets of DSC transferred to Water Company
will equal or exceed the sum of the liabilities assumed by Water
Company plus the amount of liabilities, if any, to which the
transferred assets are subject.

15. No stock of Water Company will be issued in the transaction.

16. The payment of cash in lieu of fractional shares of CWSG Common Stock
is solely for the purpose of avoiding the expense and inconvenience to
CWSG of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash that will be paid in the
Merger to the DSC shareholders instead of issuing fractional shares of
CWSG Common Stock will not exceed one percent of the total
consideration that will be issued in the Merger to the DSC shareholders
in exchange for their shares of DSC Common Stock. The fractional share
interests of each DSC shareholder will be aggregated, and no DSC
shareholder will receive cash in an amount equal to or greater than the
value of one full share of CWSG Common Stock.

17. None of the compensation received by any shareholder-employees of DSC
will be separate consideration for, or allocable to, any of their
shares of DSC Common Stock. None of the



Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 5


shares of CWSG Common Stock received by any shareholder-employees will
be separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any shareholder-employees will
be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar services.

18. Immediately before the Merger, neither CWSG nor any member of its
consolidated group, own any shares of DSC.

19. There have been no intercompany transactions between the members of the
affiliated group (as defined in section 1504(a)) of which DSC is the
common parent (the DSC Consolidated Group), with respect to which any
item of income, gain, deduction and loss has not been taken into
account by such members at the time of the transaction by reason of the
existing or predecessor intercompany transaction regulations under
section 1502 (i.e., section 1.1502-13 of the existing Income Tax
Regulations and sections 1.1502-13 and 1.1502-14 of the predecessor
Income Tax Regulations contained in the 26 CFR part 1 edition revised
as of April 1, 1995).

20. Neither DSC nor its subsidiaries has an "excess loss account" as
defined in Treasury Regulations section 1.1502-19 with respect to the
stock of any corporation included as a member of the DSC Consolidated
Group.

21. Since April 16, 1997, neither DSC nor its subsidiaries has distributed
the stock of any corporation in a transaction satisfying the
requirements of section 355.

OPINIONS

Based solely upon the Agreement and the above FACTS AND REPRESENTATIONS, and
subject to the above SCOPE OF THE OPINION, it is the opinion of KPMG that:

1. Provided the merger of DSC with and into Water Company qualifies as a
statutory merger pursuant to California General Corporation Law, the
acquisition by Water Company of all of the assets of DSC solely in
exchange for CWSG Common Stock and the assumption by Water Company of
the liabilities of DSC plus the liabilities to which DSC assets may be
subject, should qualify as a reorganization under sections 368(a)(1)(A)
and 368(a)(2)(D). DSC, CWSG, and Water Company should each be a party
to a reorganization within the meaning of section 368(b).

2. No gain or loss should be recognized by DSC on the transfer of
substantially all of its assets to Water Company in the Merger in
exchange for CWSG Common Stock and the assumption by Water Company of
the liabilities of DSC plus the liabilities to which DSC assets may be
subject. Sections 361(a) and 357(a).



Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 6


3. No gain or loss should be recognized by either CWSG or Water Company
upon the acquisition by Water Company of all of the assets of DSC in
the Merger in exchange for CWSG Common Stock and the assumption by
Water Company of the liabilities of DSC plus the liabilities to which
DSC assets may be subject. Sections 1032(a); Reg. section 1.1032-2.

4. The basis of the assets of DSC received by Water Company in the Merger
should be the same in the hands of Water Company as the basis of such
assets in the hands of DSC immediately prior to the Merger. Section
362(b).

5. The holding period of the assets of DSC received by Water Company in
the Merger should, in each instance, include the period during which
such assets were held by DSC immediately prior to the Merger. Section
1223(2).

6. No gain or loss should be recognized by a shareholder of DSC upon the
receipt of solely CWSG Common Stock (including any fractional share
interest to which the shareholder may be entitled) in exchange for
shares of DSC Common Stock in the Merger. Section 354(a)(1).

7. The basis of the CWSG Common Stock received by a shareholder of DSC
(including any fractional share interest to which the shareholder may
be entitled) should equal the basis of the DSC Common Stock surrendered
in exchange therefor. Section 358(a)(1).

8. The holding period of the CWSG Common Stock received by a shareholder
of DSC (including any fractional share interest to which the
shareholder may be entitled) should include the holding period of DSC
Common Stock surrendered in exchange therefor, provided the DSC Common
Stock was held by the shareholder as a capital asset on the date of the
Merger. Section 1223(1).

9. The payment of cash to DSC shareholders in lieu of fractional share
interests of CWSG Common Stock should be treated as if the fractional
shares were distributed as part of the Merger and then were redeemed by
CWSG. These cash payments should be treated as distributions in full
payment in exchange for the stock redeemed, as provided in section
302(a). Rev. Rul. 66-365, 1966-2 C.B. 116.

10. Where a DSC shareholder exercises statutory dissenters' rights and
receives cash for all of his or her DSC Common Stock, such cash should
be treated as having been received by the shareholder as a distribution
in redemption of his or her stock subject to the provisions and
limitations of section 302.


Mr. Gerald F. Feeney
California Water Service Group
April 1, 1999
Page 7


11. The tax attributes of DSC enumerated in section 381(c) should be taken
into account by CWSG and Water Company following the Merger. Section
381(a)(2). These tax attributes should, however, be subject to the
provisions and limitations of sections 381, 382, 383, and 384 and the
regulations thereunder.



KMPG LLP

Very truly yours,


/s/ Jeffrey K. Bergmann
Jeffrey K. Bergmann
Partner



Enclosures