California Public Utilities Commission Approves Accelerated Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA) Amortization

SAN JOSE, CA -- (Marketwire) -- 04/23/12 -- (NYSE: CWT) -- At its meeting Thursday, April 19, the California Public Utilities Commission (CPUC) issued a decision adopting a compromise position proposed by California Water Service Company (Cal Water), the CPUC's Division of Ratepayer Advocates (DRA), and three other water utilities. The decision revises CPUC policy, removing the requirement that WRAM balances reach a certain threshold before recovery and, in most cases, allowing the company to recover the balances within 18 months. The decision also orders Cal Water to address changes to the WRAM or alternative mechanisms in its 2012 General Rate Case (GRC) to limit the magnitude of customer surcharges in the future. Cal Water expects that this change will allow it to recognize more of its WRAM/MCBA revenue in the current period and improve the company's cash flow. In addition, the decision will reduce the number and duration of overlapping surcharges, which generate confusion and may send unintended price signals to current and future ratepayers.

In its 2011 year-end earnings release, California Water Service Group (Group) announced that it was required to delay recognition of $12.9 million of revenue and $2.4 million of pretax income because CPUC policy prohibited collection in a longer period than Generally Accepted Accounting Principles (GAAP) permits in order to count as current period revenue.

According to President and Chief Executive Officer Peter C. Nelson, the decision provides a reasonable solution in the short term and should improve our cash flows from operations.

"We are pleased that the CPUC recognized that this was a significant problem and adopted a solution supported by all parties in the case. And although we have concerns that some discussion and future requirements in the decision appear contrary to the CPUC's Water Action Plan's focus on promoting water conservation, we are confident that Commissioners will continue to implement policies consistent with its Plan and state law," Nelson said.

"We will have the opportunity to revisit these rate mechanisms in the General Rate Case we will file in July 2012, and we will continue to work toward solutions that are equitable to the company and our customers, and outcomes that enable continued progress in increasing water-use efficiency," he added.

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., CWS Utility Services, and HWS Utility Services, LLC. Together these companies provide regulated and non-regulated water service to approximately 2 million people in more than 100 California, Washington, New Mexico, and Hawaii communities. Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available online at

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