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News Article | April 27, 2017
Site: www.businesswire.com

SAN DIEGO--(BUSINESS WIRE)--California American Water has entered into an agreement to acquire the operating assets of the Fruitridge Vista Water Company for $20.75 million and to become the new water provider to its approximately 4,800 customers. Fruitridge Vista is a family owned Class B Water Utility in south Sacramento County and is regulated by the California Public Utilities Commission. California American Water currently supplies water service to nearly 60,000 homes and businesses in the Sacramento region and nearly 180,000 customers within the State of California. Fruitridge Vista Water Company customers will be served by California American Water's water treatment and distribution operators who are experts in their fields certified through the California State Water Resources Control Board’s Division of Drinking Water. "We are pleased to have entered into a contract and look forward to serving customers in the Fruitridge area,” said California American Water's Director of Northern California Operations S. Audie Foster. "Our Parkway water system is just south of Fruitridge Vista so we know the area well. This acquisition will allow Fruitridge Vista customers to take advantage of our excellent conservation and customer service programs.” "The contract agreement is a step forward and secures long-term quality service for our customers," said Fruitridge Vista Water Company owner Robert C. Cook Jr. Fruitridge Vista Water Company and California American Water Company will now seek approval for the sale from the CPUC. California American Water, a subsidiary of American Water (NYSE: AWK), provides high-quality and reliable water and/or wastewater services to more than 615,000 people. Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. Marking its 130th anniversary this year, the company employs more than 6,700 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 47 states and Ontario, Canada. More information can be found at www.amwater.com.


Janette Oregon has lived in the Los Angeles area since her parents moved from Mexico when she was a little over a month old. But she’s never swallowed a drop of municipal tap water. Neither have any of her friends or neighbors. “I don’t even think I know anybody,” says Oregon, who is 28. “My kids, maybe, with the hose when they’re getting wet.” Driving through Whittier, California, Oregon points out her childhood home near a 7-Eleven and her middle school a few blocks away. She says the city — which sits on the outer edge of L.A. County and has a population of nearly 90,000 — has changed considerably during her lifetime, seeing an influx of people and businesses. But Wateria, a filtered-water store, has occupied the same storefront in the city for 20 years. It was Oregon’s first place of employment, and she still works for the company today. “Buenos dias, Paz,” Oregon calls to the one employee working at the store the morning we visit. Paz Herrera would usually be busy filling water bottles for customers, but on this day, the weather is gloomy, chilly, and rainy — a rarity — so business is slow. “Any other day, the line would be out the door,” Oregon says. Un Kim, a Korean immigrant, opened this store in 1996. Since then, Wateria has grown into a regional chain of 21 stores, most of them in L.A. County. Kim and other Korean entrepreneurs own 20 of them. Anywhere in L.A., water stores do brisk business. Customers, many of them Latino immigrants or second generation, bring three, five, even 30 jugs to be filled at outposts such as House of Living Water, Oasis Water Store, and Wonder Alkaline Water. Vending machines where people can fill up bottles with water also occupy corners throughout the city. But Kim, with his franchises and sleek storefronts, is a full-blown water mogul. Wateria’s popularity demonstrates the unique culture immigrants have forged in Los Angeles, and the distrust many of them have for public services. Customers pay a premium of hundreds of dollars a year to drink filtered water instead of tap water because they’re more confident in its safety or think it tastes better. Communities of color and low-income areas in the United States are more likely to have contaminated drinking water supplies, and trust in public water systems has been further battered by the lead poisoning crisis in Flint, Michigan. But water experts and municipal water providers contend that most tap water is safe. They point out that some filtered and bottled water is even more contaminated than what comes out of the tap. Still, demand for the filtered stuff is persistent enough to keep Wateria doing good business. Inside the Whittier store, red and yellow slushies swirl in plastic machines. An ice cream freezer hums near the front window. Cold drinks, including soda and Wateria-branded water bottles, sit in refrigerated cases near the entrance. “The slush here, even though it has sugar, is made from our water,” says Oregon, nodding at the spinning ice crystals. “Our coffee also uses our water — it’s just automatic.” Bags of ice are made with the company’s filtered water, too. Further inside, the store’s crown jewel sits behind a plate of glass: a gleaming reverse osmosis machine. The tangle of wires, meters, and silver cylinders makes up Wateria’s “13-step drinking water purification system.” Kim, an engineer who used to work on portable televisions, designed the system based on a technology first developed by a French physicist in the 1700s and later refined by researchers at Dartmouth. Displaying the machine is a signature Wateria move; the owners say it builds trust in their product. That helps the average Wateria store sell about 30,000 gallons a month. The Whittier store, the chain’s busiest, sells about 75,000 gallons a month. The day I visit, the machine is pumping out 3.2 gallons of filtered water per minute. The process starts with municipal tap water. It runs through a series of filters, a UV purifier, a salt softener, as well as a few other steps before it gets pumped up to the service table, where attendants dispense it into five-gallon plastic jugs or whatever containers customers bring in. Oregon worked at this store filling those containers for two and a half years. Now, she works in accounting and payroll at Wateria headquarters in a nondescript Whittier office park surrounded by birds-of-paradise and a residential neighborhood. She’s been with the company for a decade. Sticking around that long is not unusual. Herrera has worked at Wateria for 16 years. Leslie Jimenez, another decade-long employee who works at stores in the L.A. suburbs of Norwalk and Downey, told me Wateria feels “kind of like a second family.” It’s a family business in a more literal sense as well. Un Kim’s daughter, Kelly Choi, is Wateria’s CFO. I meet the two of them in an upstairs conference room at the company’s headquarters. It’s decorated with nautical kitsch: a wooden figurine of a captain at a ship’s helm, framed sailing knots, and several model sailboats, including one branded with Wateria’s logo. Kim says the trinkets remind him of the small, sparsely populated island where he grew up in South Korea. “I have very strong nostalgia, still,” he says with a smile. After arriving in Southern California in 1994 with his wife and children in tow, Kim noticed that many residents bought water at vending machines in their neighborhoods or had it delivered. He saw an opportunity and, with his engineering mind and entrepreneurial spirit, seized it. He built his first reverse osmosis machine by hand, and still pieces together the machines himself in Wateria’s warehouse before each new store opens. According to Choi, the vended water market really blew up in L.A. in the early 2000s. “Every block, there was a water store,” she says. But Wateria struggled at first. Kim keeps the small spiral notebooks in which he used to meticulously track the day’s sales in neat rows. On Wateria’s first day, he made just $13. “This is my history book,” Kim says, pushing it toward me. “People told me, ‘You are crazy. You are going to be closed soon.’” But 20 years later, Wateria is thriving. Choi says the company stays ahead of the abundant filtered-water competition because its water is high quality. Wateria, as she portrays it, is the BMW of water stores. That’s a hard claim to test, but the company is in good standing with the state Department of Public Health, which regulates water vendors. Independent tests submitted to the department show that Wateria’s levels of total dissolved solids are consistently below allowable maximums set by the Federal Drug Administration for “purified” water, and its levels of coliform bacteria and other potential contaminants also meet standards. “The people who drink our water actually drink a better water than the Sparkletts and Arrowhead,” Choi says, referencing other commonly consumed brands. Oregon, too, believes Wateria offers a better product. “There are always the mom-and-pop shops,” she says. “Usually once they come here, they don’t go back.” Not everybody is lining up to fill bottles, though. Jeff O’Keefe, the Los Angeles region chief for the California State Water Resources Control Board’s Division of Drinking Water, seems perplexed that so many people rely on water stores. “I know that many immigrants have come from countries where they don’t have confidence in their home country’s drinking water supply, so they often feel the same way about our supply in the U.S.,” he told me. “My personal feeling is, if my program is to ensure that your tap water is safe to drink, there shouldn’t be a need for a water store.” In recent years, drinking water in L.A. County has been found to contain elevated quantities of naturally occurring arsenic and chemicals like chromium-6 from a variety of industrial activities. Generally, officials have said that treatment prevents these chemicals from reaching residents’ taps, or that the level of contamination is too low to affect health. O’Keefe insists the water delivered to people’s homes is safe. In its annual water quality report released in April, the L.A. Department of Water and Power said its water met and surpassed most federal and state water quality standards. “Your water coming out of your tap is just as good if not better” than bottled or filtered water, said Albert Rodriguez, spokesperson for the department. Greg Kail, communications director at the nonprofit American Water Works Association, a membership group for water utilities and others working in the field, points out that utilities are required by federal law to tell customers when contamination exceeds legal limits. “In the United States, we have very good water quality,” he said. “It’s important that the customers know.” “My temperature always rises when we talk about these [water stores],” says Jennifer Clary, the California water program manager at Clean Water Action, an environmental nonprofit. “If people want water that has better flavor, I can understand it, but it would certainly be much less expensive if they just put a point-of-use filter on their faucet. … If they’re worried they have something in their water they want to get rid of, they need to buy a filter that actually gets rid of it.” Clary worked with the California legislature to craft a 2007 law that more tightly regulates water vendors. The Environmental Working Group and the Natural Resources Defense Council, two nonprofits that work on environmental health, also generally recommend that residents stick with tap water and install filters on their faucets if they’re concerned about contaminants. David Andrews, a senior scientist at EWG, notes that reports on L.A.’s water show contaminant levels below legal limits. He says that filtered water purchased in large containers is similar to water filtered at home, just more expensive. Mae Wu, an attorney with NRDC’s health program, agrees, adding that most customers receiving water from big municipal systems like L.A.’s can rely on getting clean water from their faucets. Still, Andrews says that some chemicals in public water supplies can go unreported. “One of the things we’re concerned about are unregulated contaminants, contaminants that may not be tested for,” he says, such as the likely carcinogen trichloropropane. “It is difficult to discern what are concerning test results, what’s not.” But those kinds of contaminants can make their way into filtered water as well. Most water venders, like Wateria, start the filtration process with tap water, rather than drawing water from a spring, aquifer, or other natural source. O’Keefe says some water vendors’ filtration systems can actually reduce tap water’s quality. In past years, assessments of water vending machines have found filtered water that has more bacteria than tap water and chemical levels that exceed legal limits. And vended water isn’t always as well-monitored as tap water. Says Andrews, “It’s not always possible to verify that the bottled water is meeting the same standard as the tap water.” Wateria’s filtration system might be better than many companies’ systems, though. According to EWG’s water filter guide, reverse osmosis systems, like the one Wateria uses, are among the most effective. When maintained correctly, they strain out just about everything — from noxious contaminants like lead, to even beneficial minerals. And a carbon filter, which Wateria also uses, can sift out molecules that reverse osmosis misses, like volatile organic compounds. Purchasing water at stores or vending machines has a significant cost, though. Tap water costs about three-quarters of a cent per gallon for most L.A. residents. Most water stores in the area charge between 20 and 35 cents a gallon. Wateria sells its purified water for 40 cents a gallon at most of its stores, and plans to raise prices by five to 10 cents this summer. Oregon, who gets free filtered water as a Wateria employee, says her family consumes about 30 gallons each week. If she were a customer, that would cost her $12 a week. If she got her drinking water from the tap, it would cost roughly $12 a year. A Wateria customer who consumes as much as Oregon would be paying a premium of more than $600 annually. While some critics question the need for filtered water companies like Wateria, there certainly is a demand. Currently, 1,171 retail water facilities have licenses to operate in the state, according to the California Department of Health, which regulates them. Nearly 40 percent of L.A. residents buy bottled water. Bottled water advertising has been criticized for targeting people of color. Latinos are a particularly attractive demographic for bottlers and vendors, given that water stores and delivery services are ubiquitous in Mexico and Central America. In a 2011 survey of parents in the United States, about 20 percent of Latino respondents said they gave their children only bottled water — and not tap water — to drink, while just 10 percent of white respondents did the same. Latino parents reported spending a median of 1 percent of their household income on bottled water, up to a high of 12 percent, while white parents spent a median of 0.4 percent of their income on bottled water, up to a high of 6 percent. (The study found that black parents relied on bottled water more than both Latino and white parents.) It’s understandable, experts say, that historically marginalized populations — like Latino immigrants — would distrust public agencies’ claims about water safety and choose to rely on bottled water instead. “In Mexico, tap water can be hit or miss,” says Abel Valenzuela Jr., a professor of Chicano studies and the director of UCLA’s Institute for Research on Labor and Employment. “It’s uneven in terms of where you get it and what’s in it,” he says. “And then, when you add up Flint and all the media exposure related to that, it makes sense why poor folks would prefer bottled water even in the United States, where you don’t have the same sorts of problems. Or, at least they tell you we don’t have the same sorts of problems.” There’s also a taste difference, says Valenzuela, which is the main reason he and his family buy filtered and bottled water. Oregon says most of Wateria’s in-store employees are native Spanish speakers like herself. Many of the neighborhoods in which Wateria stores are located have a high proportion of Latinos. And Wateria is considering expanding to Texas, a state trailing only California in the size of its Latino population. But Latinos reportedly own few of the water stores in the L.A. area. A 2004 Los Angeles Times article reported that “virtually all the water stores in Southern California are owned by Asian and Middle Eastern immigrants.” Edward Park, a scholar on race relations in L.A. who teaches Asian Pacific American Studies at Loyola Marymount University, says Wateria is among a number of Korean-owned businesses filling niches in Latino communities, which he says are often underserved by mainstream retailers. He notes that there’s a “dimension of inequality in terms of the migration streams that are bringing folks into these communities,” meaning that some immigrant groups, including many from Asia, may get better access to capital and more support for entrepreneurial ventures in the United States. But according to Park, who is Korean American himself, the “political volatility or cultural volatility” that has existed between other demographic groups in Los Angeles is less present between Latinos and Asians. Los Angeles — like all major U.S. cities — has a history of strained race relations. As the demographics of the city have shifted, tensions have changed, too. At times, conflicts in the city have revolved around the high proportion of local businesses owned by Koreans and Korean Americans, and how those business owners interacted with their neighbors. In 1992, riots roiled L.A. after white police officers were acquitted of the beating of Rodney King, a black man, and a year after a Korean store owner shot dead Latasha Harlins, a black teenage girl. Rioters looted or destroyed about 4,500 stores, more than half of which were Korean-owned or -operated. All told, damage to Korean businesses amounted to about $500 million. Asian-American historian Shelley Sang-Hee Lee writes in a 2015 article that the Korean community’s “expansion into business ownership was striking: By the time of the [1992] riots, in Los Angeles County, one in three Korean immigrants operated a small family business. … Twenty years after the riots, Korean Americans still dominated mom-and-pop stores in South Los Angeles.” According to Valenzuela, L.A.’s history is full of entrepreneurial immigrant groups finding “creative ways” to make money by marketing to other demographic groups. That has led to tensions in the past, but he doesn’t see the same type of racial friction around water stores. “These Korean entrepreneurs … have nice, niche inroads, and are probably making lots of money,” he says. “Lots of people probably buy this water.” A lot of people do, collectively purchasing hundreds of thousands of gallons a month from Wateria. The company will likely add several more California stores to its empire this year. “He doesn’t give up. He’s always thinking,” Choi says of her father. “He’s a very good engineer. Very smart.”


SAN JOSE, CA--(Marketwired - Apr 26, 2017) - At its meeting today, the California Water Service Group ( : CWT) Board of Directors declared the company's 289th consecutive quarterly dividend in the amount of $0.18 per common share. It will be payable on May 19, 2017, to stockholders of record on May 8, 2017. California Water Service Group is the parent company of California Water Service, Washington Water Service, New Mexico Water Service, Hawaii Water Service, CWS Utility Services, and HWS Utility Services. Together, these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. California Water Service was ranked "Highest in Customer Satisfaction Among Water Utilities in the West" in 2016 by J.D. Power in its inaugural Water Utility Residential Customer Satisfaction Study. California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available online at www.calwatergroup.com. 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 the Company, the water utility industry and general economic conditions. Such words as would, 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; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, such as Zika, avian flu, H1N1 flu and severe acute respiratory syndrome, on the Company's operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; 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; 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 the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.


News Article | April 27, 2017
Site: www.marketwired.com

SAN JOSE, CA--(Marketwired - Apr 27, 2017) - California Water Service Group ( : CWT) today announced net income of $1.1 million, or $0.02 diluted earnings per diluted share, for the first quarter of 2017, compared to a net loss of $0.8 million, or $0.02 net loss per diluted share, for the first quarter of 2016. The increase in net income was primarily a result of rate increases effective January 1, 2017 and decreases in operating expenses, notably a $1.8 million reduction in California drought program incremental costs. The implementation of allowance for equity funds used during construction and accounting changes for share-based payments, effective January 1, 2017, also increased net income. These increases were partially offset by a decrease in the accrual for unbilled revenue and increases in depreciation and interest expenses. Total revenue increased $0.3 million to $122.0 million for the first quarter of 2017 as compared to revenue of $121.7 million for the first quarter of 2016. Rate increases added $11.5 million, $2.4 million of which was related to water production cost increases. Revenue decoupling mechanisms and other balancing accounts reduced revenue $7.0 million due mostly to a decrease in water production during the first quarter of 2017. The difference between adopted and recorded water production costs are recorded as an offset to the WRAM mechanism. The accrual for unbilled revenue reduced revenue $3.3 million. According to President and Chief Executive Officer Martin A. Kropelnicki, "the quarterly operating results were in line with the Company's expectations and reflect the authorized rate increases that went into effect at the beginning of the year." "We are delighted by the wet weather we have had in California, which has brought an end to the drought crisis for most of the state. We now continue to work on implementing the Governor's long-term water use regulations while continuing to support our customers' day-to-day efforts to use water more efficiently. We also remain focused on making capital improvements to our water systems as part of our annual capital investment program adopted by the CPUC," said Kropelnicki. Total operating expenses decreased $1.5 million, or 1.3%, to $114.0 million for the first quarter of 2017 as compared to operating expenses of $115.5 million for the first quarter of 2016. Water production costs increased $1.0 million, or 2.4%, to $42.1 million for the first quarter of 2017 as compared to prior year water production costs of $41.1 million, due primarily to wholesale water supplier rate increases. As designed, the California revenue decoupling mechanisms record increases to revenue equal to the increases in California water production costs. Administrative and general and other operations expenses decreased $5.7 million, or 12.2%, to $41.4 million in the first quarter of 2017, as compared to $47.1 million in the first quarter of 2016. The decrease was mostly due to the deferral of $2.6 million of costs associated with deferred WRAM operating revenue and decreases in employee health care costs of $1.9 million, California drought program incremental costs of $1.8 million, on-going conservation program costs of $0.8 million, and outside service costs of $0.3 million. These cost decreases were partially offset by increases in employee wages of $0.9 million and uninsured loss costs of $0.3 million. Changes in employee pension and other postretirement benefit costs, water conservation program costs, and employee health care costs for regulated California operations generally do not affect earnings given the regulatory treatment that allows the Company to track these costs in balancing accounts for future recovery, which creates a corresponding change to operating revenue. Depreciation and amortization expense increased $3.2 million, or 19.7%, to $19.2 million in the first quarter of 2017, as compared to $16.0 million in the first quarter of 2016, due to 2016 capital additions. Income tax benefit remained consistent at $0.9 million in the first quarter of 2017 due primarily to an income tax benefit in the first quarter of 2017 associated with the implementation of accounting changes for share-based payments. Other income, net of income taxes, increased $1.0 million in 2017, mostly due to the implementation of allowance for equity funds used during construction. Company-funded and developer-funded capital expenditures for the first quarter of 2017 were $51.9 million, a decrease of $4.6 million, or 8.2%, compared to $56.5 million in the first quarter of 2016. The decrease was primarily due to construction project delays caused by major winter storms in California during the first quarter of 2017. The under-collected net water revenue adjustment mechanism (WRAM) and modified cost balancing account (MCBA) net receivable balance increased 29.3% or $10.9 million to $48.0 million as of March 31, 2017 from $37.1 million as of December 31, 2016. The increase was mostly due to a reduction in usage by customers due to winter storms during the first quarter of 2017. In addition, there were no drought surcharges recorded as an offset to the WRAM balance during the first quarter of 2017 as compared to $11.4 million recorded in the first quarter of 2016. Regulatory Update During the first quarter of 2017, Cal Water entered into a 50-year agreement with the U.S. Department of Defense to acquire the water distribution assets of, and to provide water utility service to, the Travis Air Force Base beginning in 2018, subject to CPUC approval. Cal Water will also make initial capital improvements of about $12.7 million, with an anticipated capital investment of about $52.0 million over the 50-year term of the utility service contract. In March 2017, Cal Water submitted an advice letter to recover $25.8 million of 2016 net WRAM and MCBA account receivable balances mostly over 12 and 18 months. In April 2017, Cal Water, along with three other water utilities, filed an application to adopt a new cost of capital and capital structure for 2018. Cal Water requested a return on equity of 10.75% and a 53.4% equity capital structure as well as a water cost of capital adjustment mechanism similar to that last adopted for the company. The California Division of Ratepayer Advocates and other parties will submit testimony later in the year and may propose a different cost of capital and capital structure. The CPUC schedule for the application anticipates a decision on the matter by the end of 2017. In March 2017, Cal Water submitted an advice letter that established the School Lead Testing Memorandum Account (SLT MA), which gives Cal Water the opportunity to recover costs related to lead monitoring and testing required by the State Water Resources Control Board's Division of Drinking Water. The SLT MA will track all incremental expenses associated with lead testing conducted at the request of K-12 schools within Cal Water's service territory. Other Information All stockholders and interested investors are invited to listen to the first quarter of 2017 conference call on April 27, 2017 at 8:00 a.m. PDT (11:00 a.m. EDT) by dialing 1-866-719-0110 or 1-719-325-2104 and keying in ID # 6640105. A replay of the call will be available from 11:00 a.m. PDT (2:00 p.m. EDT) on April 27, 2017 through June 27, 2017, at 1-888-203-1112 or 1-719-457-0820, ID # 6640105. The replay will also be available under the investor relations tab at www.calwatergroup.com. Prior to the call, Cal Water will post a slide presentation on its website. The presentation can be found at www.calwatergroup.com/docs/2017q1slides.pdf after 6:00 a.m. PDT today. The call will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, Vice President and Chief Financial Officer Thomas F. Smegal III, and Vice President of Regulatory Matters and Corporate Development Paul G. Townsley. California Water Service Group is the parent company of California Water Service, Washington Water Service, New Mexico Water Service, Hawaii Water Service, CWS Utility Services, and HWS Utility Services. Together, these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. California Water Service was ranked "Highest in Customer Satisfaction among Water Utilities in the West" in 2016 by J.D. Power in its inaugural Water Utility Residential Customer Satisfaction Study. California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available online at www.calwatergroup.com. 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 the Company, the water utility industry and general economic conditions. Such words as would, 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; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, on the Company's operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; 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; 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 the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.


SAN JOSE, CA--(Marketwired - Oct 26, 2016) - At its meeting today, the California Water Service Group ( : CWT) Board of Directors declared the company's 287th consecutive quarterly dividend in the amount of $0.1725 per common share. It will be payable on November 18, 2016, to stockholders of record on November 7, 2016. California Water Service Group is the parent company of California Water Service, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., CWS Utility Services, and HWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. 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 the Company, the water utility industry and general economic conditions. Such words as would, 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; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, such as Zika, avian flu, H1N1 flu and severe acute respiratory syndrome, on the Company's operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; 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; 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 the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.


Regulators with the California Division of Oil, Gas, and Geothermal Resources (DOGGR) announced in January that they plan to halt oil and gas wastewater injection in 475 oil wells in the Golden State — but also that they will continue to allow injections into federally protected aquifers at another 1,650 wells. According to the environmental advocacy group Clean Water Action, the announcement appears to be in violation of DOGGR’s own compliance schedule, adopted by regulation in 2014, which requires all injection well operators that have not obtained an aquifer exemption from the U.S. Environmental Protection Agency (EPA) to cease injection by February 15, 2017. DOGGR’s decision covers illegal injection operations in aquifers in 29 oilfields, which will continue past the February 15 deadline while the oil companies responsible for them apply for an exemption from the U.S. Safe Drinking Water Act. California officials and the EPA must review the merits of each exemption application. There is no set timeline for this process and it could take months, Clean Water Action said. Keith Nakatani, Oil and Gas Program Manager for Clean Water Action, said that the group applauds DOGGR’s decision to shut down 475 illegal injection wells that are threatening drinking water sources. “But 1,650 other wells continue injecting in violation of the Safe Drinking Water Act,” he added. “These wells should have never been permitted, and they continue to put potential drinking water sources at risk.” Don Drysdale, a spokesman for the California Department of Conservation, of which DOGGR is a sub-department, said that the February 15 deadline was established through discussions between the EPA, DOGGR, and the California State Water Resources Control Board. “All three parties were aware that the deadline was ambitious and have been in constant communication about the efforts to bring California into full compliance with the Safe Drinking Water Act,” Drysdale said. “U.S. EPA on January 26 transmitted a letter approving the State’s current approach.” Previously, over 20 injection wells were shut down by DOGGR (11 in 2014 and 12 in 2015) as the scale of the problem with the state’s Underground Injection Control Program was first coming to light. More recently, seven companies, including oil and gas behemoth Chevron, were forced to stop injecting wastewater into 11 California aquifers by December 31, 2016. Those 11 aquifers should have been protected by the state of California all along, but officials erroneously believed that the oil companies had obtained exemptions from Safe Drinking Water Act protections from the EPA. It only emerged in 2014, after the companies had been injecting wastewater into those aquifers for three decades, that the EPA had never granted any such exemptions. In March of 2015, as revelations were still emerging that regulators at DOGGR had improperly permitted thousands of wells to inject fluids from “enhanced oil recovery techniques,” such as acidization, cyclic steam injection, and fracking, into protected aquifers, California state legislators “called the agency’s historic practices corrupt, inept, and woefully mismanaged,” according to the LA Times. When asked how DOGGR had ensured that injection operations had ceased in all 11 of the aquifers “historically treated as exempt,” which were subject to the December 31 deadline, Drysdale responded: “Initially, there were 98 injection wells listed in the aquifers facing the December deadline; injection into 71 of those was idled in advance of the deadline. The operators were very aware of the deadline and either have made or are making arrangements to dispose of produced water into other exempted zones. The Division will spot-check injection activities in those fields in addition to confirming during annual inspections and closely reviewing mandatory injection reports.” DOGGR found that all but one of the 11 aquifers “historically treated as exempt” do not meet state and federal exemption criteria. Unauthorized injection can result in a $25,000-per-day civil penalty, Drysdale noted: “[T]hat should be an ample deterrent to unauthorized injection.” The one exception is an aquifer known as the Walker Formation, which underlies the Round Mountain Field and is the subject of an aquifer exemption proposal submitted to the EPA on November 30, 2016. In a letter to the EPA dated January 17, 2017, DOGGR wrote that it has received exemption proposals for another 42 fields in all, covering more than 2,000 wells. Some 13 of those fields, covering 460 wells, are subject to the February 15 deadline because the operators provided insufficient data to support their exemption proposal. Another 10 fields covering approximately 15 wells where injection was occurring in non-exempt aquifers will also be subject to the February 15 deadline because no data was provided to support an exemption. All told, DOGGR says in the letter, 155 wells that were found to be injecting into aquifers suitable for drinking water have already been “brought into compliance.” Spot-checks and record reviews will be used to ensure compliance by the companies with ongoing injection activities in those wells that are subject to the February 15 deadline, Drysdale said. “However,” he added, “DOGGR will inspect all the wells as quickly as resources allow. Again, operators have been made aware of the deadlines and the penalties that will result from non-compliance.” DOGGR says that it has received sufficient data to evaluate the 29 other aquifer exemption proposals it has received, which would affect the 1,650 injection wells that aren’t subject to the February 15 deadline, and deemed them to have sufficient merit to be fully developed and forwarded to the State Water Control Resources Board for review. Those wells “will not be shut down because the Division and the State Water Board either currently concur that the exemption proposal meets the State and federal criteria for exemption or agree that the proposal appears to have merit warranting ultimate submission to US EPA,” according to the letter. As of the date of the letter, the State Water Resources Control Board had preliminarily concurred on seven of the proposals, four of which were finalized and submitted to the EPA for approval. In the letter, DOGGR regulators add that they anticipate another nine aquifer exemption proposals will receive preliminary concurrence from the state, either in whole or part, by February 15, 2017. In other words, DOGGR and the State Water Board expect to have at least preliminary concurrence on 16 of the 29 exemption proposals by the February 15 deadline, which they are not required to comply with in any case. “We believe that this approach will bring the State into compliance and protect public health and the environment, while avoiding unnecessarily disrupting oil and gas production in instances where the State has already done an evaluation of a proposal and believes the aquifer exemption as submitted by the State (or anticipated to be submitted by the State) will receive US EPA approval,” according to the DOGGR letter. Clean Water Action’s Nakatani responded to DOGGR’s rationale for keeping more than 1,000 injection wells in operation, saying, “The state has had more than two years to address this problem and giving oil companies more time to illegally inject is unacceptable.” Main image: A pump jack in California is used to mechanically lift liquid out of the well if there is not enough bottom hole pressure for the liquid to flow all the way to the surface. Credit: Sanjay Acharya, CC BY–SA 3.0


News Article | February 23, 2017
Site: www.marketwired.com

SAN JOSE, CA--(Marketwired - Feb 23, 2017) - California Water Service Group ( : CWT) today announced net income of $48.7 million and diluted earnings per share of $1.01 for 2016, compared to net income of $45.0 million and earnings per share of $0.94 in 2015. The $3.7 million increase in net income was primarily a result of a $2.8 million net resolution of several regulatory memorandum and balancing accounts in the California Water Service Company (Cal Water) 2015 General Rate Case (GRC) settlement agreement, a $1.9 million increase from the recovery of prior years' incremental drought program costs, a resolution of litigation proceeds in the GRC settlement agreement, and a $1.7 million increase in estimated unbilled revenue in 2016. These increases were partially offset by increases in other operations expense, which included a GRC settlement agreement to write-off $3.2 million associated with a cancelled water supply project in Bakersfield which was recognized in the third quarter, increases in depreciation and amortization, maintenance, property tax, employee wage, and net interest expenses. "Although 2016 was one of the more challenging years in the Company's recent history, we achieved many successes," said President and Chief Executive Officer Martin A. Kropelnicki. "The Company's key accomplishments included partnering with customers to achieve significant water savings during the California drought; responding effectively to the Erskine fire in Kern River Valley; investing a record $228.9 million to improve and upgrade critical water system infrastructure; increasing the dividend by three percent, which was our 49th consecutive annual increase; and being ranked highest in overall satisfaction among water utilities in the western United States in J.D. Powers' inaugural water utility residential customer satisfaction survey. "We ended 2016 with the CPUC's timely approval of our 2015 General Rate Case. The parties involved worked diligently in drafting a fair and reasonable settlement. The authorizations in the GRC, including $658.8 million of capital investment over three years, ensure we can continue improving the quality of life for customers and communities we serve," he said. Additional Financial Results for 2016 Total revenue increased 3.6% to $609.4 million in 2016 compared to $588.4 million in 2015, primarily due to rate increases to offset increases in purchased water quantities and wholesale water rates. Total operating expenses increased $16.0 million, or 3.1%, to $533.2 million in 2016 compared to the prior year. Water production expenses increased $12.1 million, or 5.8 %, to $220.0 million in 2016, primarily due to increases in purchased water quantities and higher wholesale water rates. As designed, the California revenue decoupling mechanisms record an increase to revenue equal to the increase in California water production costs. Administrative & general and other operations expenses decreased slightly to $178.6 million in 2016, primarily due to decreases in employee benefit costs, incremental drought program expenses, and a decrease in uninsured loss costs. These cost decreases were partially offset by an increase in costs associated with the realization of operating revenue that was deferred in prior years, a third-quarter write-off of $3.2 million of capital costs, increases in conservation program costs, and employee wages. Changes in employee pension benefits, employee and retiree medical costs, and water conservation program costs for regulated California operations generally do not affect earnings, as the Company is allowed by the CPUC to record these costs in balancing accounts for future recovery, creating a corresponding change to revenue. Incremental California drought program operating expenses were approximately $4.3 million in 2016, the same as in 2015. These expenses were included in administrative & general, other operations, and maintenance expenses. Further, all incremental drought costs are recorded in a CPUC authorized memorandum account that is recoverable after CPUC reasonableness review and approval. Maintenance expenses increased $1.5 million, or 7.1%, to $23.0 million in 2016, due to increased costs for repairs of reservoirs, tanks, and services. Income taxes increased $0.3 million, or 1.1%, to $24.8 million in 2016, due primarily to an increase in net operating income, which was partially offset by an increase in the tax benefit from the flow through method of accounting for "repairs" deductions on the Company's state income tax filings. The estimated effective tax rate for 2016 is 35.5%. Other income, net of income taxes, increased $1.9 million in 2016, due primarily to the recognition of $1.5 million of litigation proceeds approved in the Cal Water 2015 GRC settlement agreement and an unrealized gain on our benefit plan insurance investments. Fourth Quarter 2016 Results For the fourth quarter of 2016, net income increased $6.6 million, or 78.0%, to $15.1 million, and diluted earnings per share increased $0.13, or 72.2%, to $0.31 per diluted share compared to the fourth quarter of 2015. The increase in net income was due primarily to increases from the resolution of several regulatory memorandum and balancing accounts in the Cal Water 2015 GRC settlement agreement, CPUC authorization to recover prior year incremental drought program costs, and an increase in other income in 2016. These increases were partially offset by increases in other operations, depreciation and amortization, property tax, and net interest expenses. Revenue for the fourth quarter increased $12.5 million, or 9.0%, to $150.9 million mostly due to rate increases and changes to various balancing accounts, which were authorized in the California GRC decision. Total operating expenses for the quarter increased $6.1 million, or 5.0%, to $129.6 million. Water production expenses increased $1.9 million mostly due to increases in purchased water quantities and wholesale water rates. Administrative & general and other operations expenses increased $1.7 million, or 3.8%, to $45.8 million due to an increase in costs associated with the realization of operating revenue that was deferred in prior years, and increases in conservation program costs, which were partially offset by decreases in employee benefit costs and incremental drought program expenses. Maintenance expense decreased $0.3 million, or 4.8%, to $5.5 million. Other income, net of income taxes, increased $0.7 million, or 74.2%, to $1.6 million mostly due to the recognition of $1.5 million of litigation proceeds. Net interest expense increased $0.4 million, or 6.0%, to $7.9 million. The under-collected net receivable balance in the WRAM and MCBA mechanism was $36.6 million as of December 31, 2016, a decrease of 8.5%, or $3.4 million, from the balance of $40.0 million as of December 31, 2015. Regulatory Update On December 15, 2016, the CPUC voted to approve Cal Water's 2015 GRC settlement agreement. The approved decision, which was proposed by the presiding Administrative Law Judge in November 2016, authorizes Cal Water to increase gross revenue by approximately $45.0 million in 2017, $17.2 million in 2018, and $16.3 million in 2019, and up to $30.0 million upon completion and approval of the Company's advice letter projects. The 2018 and 2019 revenue increases are subject to the CPUC's earning test protocol. The CPUC's decision also authorizes Cal Water to invest $658.8 million in water system improvements throughout California over the three-year period of 2016-2018 in order to continue to provide safe and reliable water to its customers. This figure includes $197.3 million of water system infrastructure improvements that will be subject to the CPUC's advice letter procedure. Other Information All stockholders and interested investors are invited to listen to the 2016 year-end and fourth quarter conference call on February 23, 2017 at 8:00 a.m. PST (11:00 a.m. EST) by dialing 1-888-806-6208 or 1-913-312-1516 and keying in ID #7406571. A replay of the call will be available from 11:00 a.m. PST (2:00 p.m. EST) on February 23, 2017 through April 23, 2017, at 1-888-203-1112 or 1-719-457-0820, ID #7406571. The replay will also be available under the investor relations tab at www.calwatergroup.com. Prior to the call, Cal Water will post a slide presentation on its website. The presentation can be found at www.calwatergroup.com/docs/2016q4slides.pdf after 6:00 a.m. PDT. The call will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, Vice President and Chief Financial Officer Thomas F. Smegal III, and Vice President of Regulatory Matters Paul G. Townsley. California Water Service Group is the parent company of California Water Service, Washington Water Service, New Mexico Water Service, Hawaii Water Service, CWS Utility Services, and HWS Utility Services. Together, these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. California Water Service was ranked "Highest in Customer Satisfaction Among Water Utilities in the West" in 2016 by J.D. Power in its inaugural Water Utility Residential Customer Satisfaction Study. California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available online at www.calwatergroup.com. 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 the Company, the water utility industry and general economic conditions. Such words as would, 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; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, such as Zika, avian flu, H1N1 flu and severe acute respiratory syndrome, on the Company's operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; 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; 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 the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.


News Article | October 28, 2016
Site: www.marketwired.com

SAN JOSE, CA--(Marketwired - Oct 27, 2016) - California Water Service Group ( : CWT) today announced 2016 third quarter net income of $22.9 million or $0.48 per diluted common share, compared to net income of $25.1 million or $0.52 per diluted common share for the same period last year. The $2.2 million decrease was primarily attributed to a write-off of $3.2 million of capital costs that are not expected to be recovered as part of the California general rate case (GRC) settlement the company filed on September 2, a decrease in accrued unbilled revenue, an increase in depreciation & amortization, and an increase in net interest expenses which were partially offset by decreases in uninsured loss and maintenance expenses. Total revenue increased $0.7 million to $184.3 million, compared to revenue of $183.6 million for the third quarter of 2015. Rate increases added $8.3 million, of which $6.2 million was related to water production cost increases. During the quarter, the accrued unbilled revenue declined $5.1 million driven by customer bill rate changes. Revenue decoupling mechanisms and other balancing accounts reduced revenue $2.9 million. The water revenue adjustment mechanism (WRAM) account records changes in billed revenue. Unbilled revenue is an accounting estimate that is accrued at the end of the quarter. The unbilled revenue accrual is subject to consumption changes and will fluctuate on a quarter-to-quarter basis. Total operating expenses increased $2.9 million, or 1.9%, to $154.2 million in the third quarter of 2016 compared to operating expenses of $151.3 million in the third quarter of 2015, principally due to a $9.7 million or 16.1% increase in water production costs. The increase in water production costs was primarily due to a 7.7% increase in blended purchased water rates from water wholesalers and a 10.3% increase in the use of purchased water to meet customer demand. Administrative & general and other operations expenses decreased $5.2 million, or 10.7%, to $43.4 million, primarily due to decreases in employee benefits, uninsured loss expenses, and California drought and water conservation program costs, which were partially offset by the write-off of $3.2 million of capital costs that are not expected to be recovered as part of the California GRC. The write-off of capital costs were for engineering design costs for a cancelled Cal Water and City of Bakersfield water treatment plant project, previously recorded as property held for future use. Water conservation program costs are affected by seasonal patterns and customer demand. Changes in employee pension and other postretirement benefits and water conservation program expenses for regulated California operations do not affect net income, because the Company is permitted by the California Public Utilities Commission (CPUC) to record these costs in balancing accounts for future recovery, which creates a corresponding change to operating revenue. Drought program costs are tracked in a CPUC-approved memorandum account and require CPUC review before they become recoverable. Income taxes decreased $2.1 million, or 13.4%, to $13.2 million in the third quarter of 2016 compared to the third quarter of 2015, primarily due to a decrease in pre-tax income in the third quarter of 2016 as compared to the prior year. The Company's estimated effective tax rate for fiscal year 2016 is 38%. Net other income increased $0.9 million to net other income of $0.5 million in the third quarter of 2016, as compared to a net loss of $0.4 million in the third quarter of 2015, principally due to an unrealized gain on our benefit plan insurance investments. Net interest expense increased $1.0 million, or 15.0%, to $7.7 million in the third quarter of 2016 due mostly to 2015 and 2016 financing activities. According to President and Chief Executive Officer Martin A. Kropelnicki, "The third quarter of 2016 was extremely busy for us. We continued to deal with the historic California drought, filed our settlement for the California GRC, helped our customers affected by the Erskine Fire in Kern County, and announced our successful bid to operate the water system at Travis Air Force Base. Further, during the quarter, as filed in our GRC settlement, the company recorded the impairment of design costs from a joint water treatment plant project with the City of Bakersfield that the City was no longer interested in completing. Now with the settlement pending approval by the CPUC, we look forward to getting the rate case completed before year-end and moving forward with our capital programs to improve infrastructure for the benefit of our customers." Year-to-Date Results For the nine-month period ended September 30, 2016, net income was $33.6 million or $0.70 per diluted common share, compared to net income of $36.5 million or $0.76 per diluted common share for the nine-month period ended September 30, 2015. The $2.9 million decrease in net income was primarily due to a write-off of $3.2 million of capital costs that are not expected to be recovered as part of the California GRC settlement and increases in maintenance, drought-related costs, depreciation and amortization and net interest expenses which were partially offset by an increase in accrued unbilled revenue and a decrease in uninsured loss expenses. Water System Infrastructure Improvements During the first nine months of 2016, the total company-funded and developer-funded investment was $166.4 million in utility plant, up 40.7%, or $48.1 million, from $118.3 million in the first nine months of 2015. 2015 California GRC As previously reported, in July 2015, California Water Service Company (Cal Water) filed a GRC application seeking rate increases in all regulated operating districts in California effective January 1, 2017. The 2015 GRC application requests increased revenues of $94.8 million for 2017, $23.0 million for 2018, and $22.6 million for 2019. The primary reason for the requested revenue increase was a proposed capital program of $693.0 million in districts throughout California over the three-year period from January 1, 2016 through December 31, 2018. The GRC process considers the views of several intervenors, including the CPUC's Office of Ratepayer Advocates (ORA). On September 2, 2016, Cal Water entered into a settlement agreement with the ORA and other parties to its 2015 GRC. The Commission may or may not adopt the settlement agreement as proposed by the parties. If the settlement agreement is approved as proposed, Cal Water would be authorized to invest $658.8 million in districts throughout California over the three-year period from January 1, 2016 through December 31, 2018 in order to provide a safe and reliable water supply to its customers. Included in the $658.8 million in water system infrastructure improvements is $197.3 million that would be recovered through the CPUC's advice letter procedure upon completion of qualified projects. Under the terms of the settlement, the Company would be authorized to increase revenue by approximately $45.0 million in 2017, $17.2 million in 2018, and $16.3 million in 2019, and up to $30.0 million upon completion and approval of the company's advice letter projects. The GRC is being processed according to the adopted schedule which would allow for a decision at the end of 2016. Any rate change as a result of this filing is expected to be effective on January 1, 2017. In the event of a delay in a final decision, Cal Water would be allowed to implement interim rates beginning January 1, 2017 under the CPUC's policies. Recovery of Incremental Drought Expenses On July 15, 2016, Cal Water filed an advice letter to recover $4.2 million of incremental drought expenses associated with calendar years 2014 and 2015. During the third quarter of 2016, the Company discussed the request with interested parties including ORA. Cal Water filed a revised advice letter on October 12, 2016 to recover $2.9 million in incremental costs related to 2014 and 2015 expenses, which will be recoverable to the extent approved by the CPUC in a future period. During the first nine months of 2016 drought costs were $4.0 million, up 48.1% from drought costs of $2.7 million during the first nine months of 2015. Recovery of net WRAM and MCBA receivable balance The under-collected net receivable balance in the WRAM and MCBA mechanism was $30.6 million at the end of the third quarter, up 5.5% or $1.6 million from the balance at the end of the second quarter. Due to the Company's drought response including drought surcharges, the under-collected balance has decreased by $17.5 million or 36.4% since the second quarter of 2015. Other Information All stockholders and interested investors are invited to listen to the third quarter of 2016 conference call on October 27, 2016 at 8:00 a.m. PDT (11:00 a.m. EDT) by dialing 1-877-604-9665 and keying in ID #7228386. A replay of the call will be available from 11:00 a.m. PDT (2:00 p.m. EDT) on October 27, 2016 through December 27, 2016, at 1-888-203-1112 or 1-719-457-0820, ID #7228386. The replay will also be available under the investor relations tab at www.calwatergroup.com. Prior to the call, Cal Water will post a slide presentation on its website. The presentation can be found at www.calwatergroup.com/docs/earningsslidesseptember2016.pdf after 6:00 a.m. PDT. The call will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, Vice President and Chief Financial Officer Thomas F. Smegal III, and Vice President of Regulatory Matters Paul G. Townsley. 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 www.calwatergroup.com. 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 the Company, the water utility industry and general economic conditions. Such words as would, 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; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, such as Zika, avian flu, H1N1 flu and severe acute respiratory syndrome, on the Company's operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; 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; 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 the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.


News Article | October 27, 2016
Site: co.newswire.com

Based on data collected from the California State Water Resources Control Board, a study by SERVIZ grades water usage of Southern California cities to help educate residents on the drought.


News Article | November 2, 2016
Site: www.sej.org

"California on Tuesday moved to ease water conservation rules for farmers in the northern and central parts of the state, a sign that a wet fall may portend an easing of the state's five-year drought. The decision to temporarily stop requiring mostly agricultural users from detailing how much they take from key watersheds comes as new data show that conservation among urban Californians was up slightly in September over August. Felicia Marcus, chair of the California State Water Resources Control Board, said she welcomed rain that drenched cities throughout the state in October, but warned that the state's crushing drought was not yet over."

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