Item 1. Business.
a. General Development of Business.
	 California Water Service Company (the "Company") is a 	 public utility water company which owns and operates 20 	 water systems serving 38 cities and communities and 	 adjacent territories in California with an estimated 	 population of more than 1,400,000. Prior to 1993, the 	 Company had 21 operating districts; however, during 1993, 	 the San Carlos and San Mateo districts were consolidated 	 to become the Mid-Peninsula district.
	 The Company, one of the largest investor-owned water 	 companies in the United States, was incorporated under 	 the laws of the State of California on December 21, 1926. 	 Its principal executive offices are located at 1720 North 	 First Street, San Jose, California, and its mailing 	 address is Post Office Box 1150, San Jose, California 	 95108 (telephone number: 1-408-451-8200). The Company's 	 Common Stock is traded in the over-the-counter market and 	 is quoted by the National Association of Securities 	 Dealers Automated Quotation System (NASDAQ) under the 	 symbol CWTR. The Company is currently in the process of 	 seeking to list its common shares on the New York Stock 	 Exchange.
	 During the fiscal year ended December 31, 1993 (the "1993 	 fiscal year"), there were no significant changes in the 	 kind of products produced or services rendered by the 	 Company, or in the Company's markets or methods of 	 distribution.
	 Regulation and Rates.
	 The Company is subject to regulation of its rates, 	 service and other matters affecting its business by the 	 Public Utilities Commission of the State of California 	 ("Commission" or "PUC").
	 The Company's systems, which are operated as 20 separate 	 districts in the State of California, are not integrated 	 with one another, and except for allocation of general 	 office expenses and the determination of cost of capital, 	 the expenses and revenues of individual districts are not 	 affected by operations in other districts. Cost of 	 capital (i.e. return on debt and equity) is determined on 	 a Company-wide basis. Otherwise, the PUC requires that 	 each district be considered a separate and distinct 	 entity for rate-making purposes.
	 The California Public Utilities Commission requires 	 that water rates for each Company operating district be 	 determined independently. Each year the Company 	 attempts to file general rate increase applications for 	 approximately one-third of its operating districts. 	 According to its rate case processing procedures for 	 water utilities, the Commission attempts to issue 	 decisions within eight months of acceptance of the 	 Application. Rates are set prospectively for a 	 three-year period, with a provision for step increases 	 to maintain the authorized rate of return. Offset rate 	 adjustments are also allowed as required for changes in 	 purchased water, power and pump tax costs.
	 During 1993, general rate increase applications were 	 filed with the Commission requesting rate relief of 	 $2,100,000 in three Company districts based upon a rate 	 of return on common equity of 12%. However, in recent 	 proceedings, the Commission has authorized a rate of 	 return on common equity of about 10.50%. Public 	 hearings for these cases have been scheduled for late 	 March 1994. In the meantime, step increases for 15 	 districts totaling approximately $2,233,000 were 	 authorized in January 1994.
	 The Company received two general rate case decisions in 	 1993. In April, the Commission issued a decision on 	 general rate cases filed in July 1991 for six 	 districts, authorizing $390,000 in additional revenue 	 based on a return on common equity of 11.50%. Then in 	 August 1993, the Commission issued a decision on 	 general rate cases filed in July 1992 for seven 	 districts, providing a revenue increase of $3,408,000 	 based on a return on common equity of 11%.
	 In November 1992, hearings began in the Commission's 	 investigation of the current financial and operational 	 risks which confront water utilities. This 	 investigation addresses two of the most significant 	 challenges to the California water industry--water 	 supply and water quality and their effect on 	 appropriate rates of return to be authorized by the 	 Commission. The California Water Association retained 	 expert witnesses to put forth the industry's position. 	 The hearings concluded in 1993 and the Commission is 	 expected to issue its decision sometime in 1994.
	 Interim rate relief in the Stockton district totaling 	 $1,900,000 was granted by the Commission in July 1993 	 for changes in purchased water expense, purchased power 	 costs and pump taxes. The Commission staff's 	 continuing review of these costs had delayed recovery 	 since 1989 when the amended Stockton supplemental water 	 purchase contract was first implemented. As part of 	 the staff's continuing review of the amended contract, 	 an independent consultant was hired by the Commission 	 staff to review the amended contract and a report is 	 expected in early 1994.
	 	 Two additional offset changes relating to the cost of 	 surface water supplies were issued by the Commission 	 during the past year. The first decision authorized 	 rate relief totaling $3,500,000 effective July 1, 1993, 	 to cover the increased cost of purchased water from the 	 Metropolitan Water District of Southern California to 	 serve the Company's four Los Angeles area districts, 	 and the second decision authorized a rate reduction 	 beginning in July and August totaling $4,300,000 for 	 customers in the Company's three San Francisco 	 Peninsula districts to reflect a 33% decrease in the 	 cost of purchased water from the wholesale supplier, 	 the San Francisco Water Department. Additional offset 	 rate relief of $637,000 was granted for the Bakersfield 	 district in November 1993 to allow for adjustments in 	 the district's water production expense balancing 	 account as permitted under the rate-making process.
	 The Company's headquarters in San Jose was recently 	 renovated and expanded with the addition of a new 	 engineering-water quality building to accommodate 	 increased staffing levels. This was the first 	 remodeling and expansion since expansion of facilities 	 to accommodate the Company's Information System 	 Department in 1972. As permitted by a prior Commission 	 order, an advice letter to recover the increased costs 	 due to the renovation and expansion was filed with the 	 CPUC in late 1993 requesting approximately $360,000 in 	 additional revenue.
b. Financial Information about Industry Segments.
	 The Company has only one business segment.
c. Narrative Description of Business.
	 The sole business of the Company consists of the pro- 	 duction, purchase, storage, purification, distribution 	 and sale of water for domestic, industrial, public, and 	 irrigation uses, and for fire protection. The 	 Company's business fluctuates according to the demand 	 for water, which is partially dictated by seasonal 	 conditions, such as summer temperatures or the amount 	 and timing of rain during the year. The Company holds 	 such franchises or permits in the communities it serves 	 as it judges necessary to operate and maintain its 	 facilities in the public streets. The Company 	 distributes its water to customers in accordance with 	 accepted water utility methods, which include pumping 	 from storage and gravity feed from high elevation 	 reservoirs.
	 Geographical Service Areas and Number of Customers at Year-End.
	 The principal markets for the Company's products are users of 	 water within the Company's service areas. The Company's 	 geographical service areas and the approximate number of 	 customers served in each at December 31, 1993, are as follows:
SAN FRANCISCO BAY AREA Mid-Peninsula (San Mateo and San Carlos) 35,200 South San Francisco (including Colma and Broadmoor) 15,300 Bear Gulch (including Menlo Park, Atherton, Woodside and Portola Valley) 17,100 Los Altos (including Los Altos and portions of Cupertino, Los Altos Hills, Mountain View and Sunnyvale) 17,700 Livermore 14,700 								100,000
SACRAMENTO VALLEY Chico (including Hamilton City) 20,100 Oroville 3,500 Marysville 3,800 Dixon 2,700 Willows 2,200 								 32,300 SALINAS VALLEY Salinas 22,600 King City 1,800 								 24,400 SAN JOAQUIN VALLEY Bakersfield 54,300 Stockton 40,700 Visalia 25,500 Selma 4,600 								125,100 LOS ANGELES AREA East Los Angeles (including portions of City of Commerce and Montebello) 26,400 Hermosa Beach and Redondo Beach (including portions of Torrance) 24,700 Palos Verdes (including Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills Estates and Rolling Hills) 23,400 Westlake (portion of Thousand Oaks) 6,600 								81,100
TOTAL 362,900
	 Water Supply
	 The Company's water supply is obtained from wells, surface 	 runoff or diversion and by purchase from public agencies and 	 other suppliers. The effects of the recent California 	 drought (which ended after the 1992-93 winter) are discussed 	 below. Except for periods of drought, the Company in the 	 past has had adequate water supplies to meet the existing 	 requirements of its service areas.
	 The Company delivered approximately 95 billion gallons of 	 water during the 1993 fiscal year, of which approximately 	 50% was obtained from wells, and 50% was purchased from the 	 following suppliers:
			 % of 			 Supply District Purchased Source of Purchased Supply
SAN FRANCISCO BAY AREA
Mid-Peninsula 100% San Francisco Water Department
South San Francisco 74% San Francisco Water Department
Bear Gulch 86% San Francisco Water Department
Los Altos 67% Santa Clara Valley Water District
Livermore 73% Alameda County Flood Control 				 and Water Conservation District
SACRAMENTO VALLEY
Oroville 81% Pacific Gas and Electric Company 			 1% County of Butte
SAN JOAQUIN VALLEY
Bakersfield 21% Kern County Water Agency
Stockton 72% Stockton-East Water District
LOS ANGELES AREA
East Los Angeles 99% Central Basin Municipal 				 Water District
			 % of 			 Supply District Purchased Source of Purchased Supply
LOS ANGELES AREA (Continued)
Hermosa Beach and Redondo Beach 100% West Basin Municipal 				 Water District
Palos Verdes 100% West Basin Municipal 				 Water District
Westlake 100% Russell Valley Municipal 				 Water District
	 The balance of the required supply for the above districts 	 is obtained from wells, except for Bear Gulch where the 	 balance is obtained from surface runoff from a local 	 watershed.
	 The Chico, Marysville, Dixon and Willows districts in the 	 Sacramento Valley, the Salinas and King City districts in 	 the Salinas Valley, and the Selma and Visalia districts in 	 the San Joaquin Valley obtain their entire supply from 	 wells. In these districts, although groundwater levels 	 have declined during the six consecutive years of below 	 normal precipitation (1986-1992), they remain, in the 	 opinion of the Company, adequate for anticipated future 	 needs. However, in the Salinas Valley, declining water 	 tables have resulted in salt water intrusion in some areas 	 adjacent to Monterey Bay. Operational changes have been 	 made in the Salinas district in an attempt to retard the 	 movement of salt water toward the Company's production 	 wells. Pumping of vulnerable wells has been curtailed and 	 supply supplemented by boosting water from other zones. 	 The Company continues to cooperate with the Monterey County 	 Water Resources Agency and other groups on long-term 	 mitigation plans. 	 	 Purchases for the Los Altos, Livermore, Oroville, Stockton 	 and Bakersfield districts are pursuant to long-term 	 contracts expiring on various dates after 2011, except for 	 the Livermore contract which expired in July 1992. 	 Discussions with Zone 7 of the Alameda County Flood Control 	 and Water Conservation District regarding the renewal of 	 the contract are currently in progress and a new contract 	 is expected to be completed within a few months. The 	 contract, which expired in July 1992, requires water 	 deliveries to continue for two years after the expiration 	 of the contract. The supplies for the East Los Angeles, 	 Hermosa-Redondo, Palos Verdes and Westlake districts are 	 provided to the Company by public agencies pursuant to an 	 obligation of continued nonpreferential service to persons 	 within their boundaries.
	 Purchases for the South San Francisco, Mid-Peninsula and 	 Bear Gulch districts are pursuant to long-term contracts with 	 the San Francisco Water Department expiring June 30, 2009.
	 Water supplies in California's major reservoirs were at 	 22.4 million acre feet on January 1, 1994, almost doubled 	 that recorded one year earlier when the state was in its 	 sixth year of drought. The state's current reservoir 	 supply, which is at average for this time of year, was 	 replenished during 1993 as a result of the abundant runoff 	 which followed the above average precipitation of the 	 1992-93 winter season. Twelve Company districts receive 	 all or a portion of their supply from surface water runoff 	 captured by state and local reservoirs. While overall 	 reservoir storage remained normal at the start of 1994, the 	 snowpack in the Sierra on January 3, 1994, was 	 approximately 45% of average for this date, indicating that 	 the 1993-94 water year has started significantly drier than 	 last year's above average season. Subsequent storms in 	 mid-February 1994 have greatly increased the Sierra 	 snowpack.
	 Although substantial reserves remain in underground 	 aquifers which serve 16 Company districts, many groundwater 	 tables have not fully recovered from the effects of the 	 drought. Taking this into consideration, together with the 	 fact that California will continue to have long-term water 	 supply problems with future growth, the Company will 	 maintain its water conservation efforts through a variety 	 of customer programs initiated during the drought. The 	 state's improved supply conditions have eliminated the need 	 for water rationing.
	 While not under a mandatory rationing program during 1994, 	 customers in the Company's Salinas district will be asked 	 to voluntarily cut water use by 15% to conform to a new 	 local ordinance. The new law, which places water use 	 restrictions on both urban and agricultural users in 	 Monterey County, is part of an overall program to curtail 	 ocean salt water intrusion. Possible program options 	 include: The use of additional supplies from southern 	 Monterey County reservoirs for imported surface water and 	 groundwater recharge; the use of 20,000 acre feet of 	 reclaimed water from the Regional Water Treatment plant in 	 Marina, recycled for irrigation use and groundwater 	 recharge; restrictions placed upon the Salinas Valley's 	 urban and agricultural communities on water use; and the 	 possible development of a new dam and reservoir in the 	 County's Arroyo Seco area for reserve storage and recharge 	 of the underground through the Salinas and Arroyo Seco 	 Rivers.
	 Utility Plant Construction Program and Acquisitions.
	 The Company is continually extending and enlarging its 	 facilities as required to meet increasing demands and to 	 maintain its service. Capital expenditures for these 	 purposes and for the replacement of existing facilities 	 amounted to approximately $29 million in 1993. Financing 	 was obtained from funds from operations, temporary cash 	 investments, first mortgage bonds, advances for 	 construction, and contributions in aid of construction as 	 set forth in the section entitled "Statement of Cash Flows" 	 on page 20 of the Company's 1993 Annual Report and is 	 incorporated herein by reference. Advances for 	 construction of main extensions are received by the Company 	 from subdivision developers under the rules of the PUC. 	 These advances are refundable without interest over a 	 period of years. Contributions in aid of construction 	 consist of nonrefundable cash deposits or facilities 	 received from developers.
	 The Company now estimates that additions and improvements 	 to its facilities during 1994 will amount to approximately 	 $21,600,000 (exclusive of additions and improvements 	 financed through advances for construction and 	 contributions in aid of construction), which is expected to 	 be financed with internally generated funds and short-term 	 borrowings to be replaced by funds from issuance of 	 approximately 600,000 shares of common stock during the 	 year or from the issuance of first mortgage bonds.
	 In November 1992, the Company executed a Stock Purchase 	 Agreement to acquire Del Este Water Company located in 	 Modesto, California, through an exchange of common stock. 	 However, in August 1993, the Company elected not to pursue 	 the purchase after the City of Modesto initiated 	 condemnation proceedings to acquire the system from the 	 present owner.
	 Quality of Supplies.
	 The Company maintains procedures to produce potable water 	 in accordance with accepted water utility practice. All 	 water entering the distribution systems from surface 	 sources is chlorinated and in most cases filtered. Samples 	 of water from each district are analyzed regularly by 	 Company bacteriologists.
	 Competition and Condemnation.
	 The Company is a public utility regulated by the PUC. The 	 Company provides service within filed service areas 	 approved by the PUC. Under the laws of the State of 	 California, no privately owned public utility may compete 	 with the Company in any territory already served by the 	 Company without first obtaining a certificate of public 	 convenience and necessity from the PUC. Under PUC 	 practice, such certificate will be issued only on a showing 	 that the Company's service in such territory is inadequate.
	 	 California law also provides that whenever a public 	 agency constructs facilities to extend a utility service 	 into the service area of a privately owned public 	 utility, such an act constitutes the taking of property 	 and for such taking the public utility is to be paid just 	 compensation. 	 	 Under the constitution and statutes of the State of 	 California, municipalities, water districts and other 	 public agencies have been authorized to engage in the 	 ownership and operation of water systems. Such agencies 	 are empowered to condemn properties already operated by 	 privately owned public utilities upon payment of just 	 compensation and are further authorized to issue bonds 	 (including revenue bonds) for the purpose of acquiring or 	 constructing water systems. To the Company's knowledge, 	 no municipality, water district or other public agency 	 has pending any action to condemn any of the Company's 	 systems.
	 Environmental Matters.
	 The Company is subject to environmental regulation by 	 various governmental authorities. Compliance with 	 federal, state and local provisions which have been 	 enacted or adopted regulating the discharge of materials 	 into the environment, or otherwise relating to the 	 protection of the environment, has not had, as of the 	 date of filing of this Form lO-K, any material effect on 	 the Company's capital expenditures, earnings or 	 competitive position. No such material effect is 	 anticipated for the fiscal years ending December 31, 1994 	 and 1995.
	 Human Resources.
	 As of December 31, 1993, the Company had 614 employees, 	 of whom 150 were executive and administrative officials 	 and supervisory employees, and 464 were members of 	 unions. The Company presently has two-year collective 	 bargaining agreements expiring December 31, 1995, with 	 the Utility Workers of America, AFL-CIO, representing the 	 majority of employees, and the International Federation 	 of Professional and Technical Engineers, AFL-CIO, 	 representing certain engineering department employees.
d. Financial Information about Foreign and Domestic 	 Operations and Export Sales.
	 The Company makes no export sales.
Item 2.
Item 2. Properties.
	 The Company's physical properties consist of offices and 	 water systems for the production, storage, purification, 	 and distribution of water. These properties are located 	 in or near the service areas listed above in the section 	 entitled "Water Supply." The Company maintains all of its 	 properties in good operating condition.
	 The Company holds all its principal properties in fee, 	 subject to the lien of the indenture securing the 	 Company's first mortgage bonds, of which there were 	 outstanding at December 31, 1993, $129,608,000 in 	 principal amount.
Item 3.
Item 3. Legal Proceedings.
	 The Company is involved in only routine litigation which 	 is incidental to the business.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
	 No matters were submitted to a vote of security holders in 	 the fourth quarter of fiscal year 1993.
Executive Officers of the Registrant.
Name Positions and Offices with the Company Age
								 C. H. Stump Chairman of the Board since 1991, Chief 		 Executive Officer 1991 to May 1992. 		 Director since 1976, and Member of 68 		 Executive Committee since 1977. 		 Mr. Stump was Secretary of the 		 Company from 1959 to 1966, Secretary and 		 Treasurer from 1966 to 1975, Executive 		 Vice President from 1975 to 1981, 		 President and Chief Operating Officer 		 from 1981 to 1986, and President and Chief 		 Executive Officer from 1986 to 1992.
Donald L. Houck President, Chief Executive Officer 61 		 since May 1992. Director since 1988. 		 Mr. Houck was Executive Vice President 		 and Chief Operating Officer from 1986 		 to 1992 and a Vice President since 1977. 		 Prior to that, Mr. Houck was a supervising 		 engineer with the California Public 		 Utilities Commission with eighteen years 		 experience in the rate-making process.
Harold C. Ulrich Vice President and Chief Financial 64 		 Officer since 1976 and Treasurer since 		 1975. Mr. Ulrich was Controller of the 		 Company from 1966 to 1975.
Kenneth J. Roed Vice President, Corporate Communications, 64 		 since 1988. Mr. Roed was previously 		 employed by the Company for 12 years as 		 Assistant to the President and Director of 		 Corporate Communications.
Francis S. Ferraro Vice President since August 1989. Mr. 44 		 Ferraro previously had 15 years experience in 		 regulatory matters with the California Public 		 Utilities Commission, from June 1985 in the 		 capacity of an administrative law judge.
Raymond H. Taylor Vice President since April 1990. Mr. Taylor 48 		 had been director of water quality since 		 1986 and previously had been employed by 		 the Environmental Protection Agency 		 before joining the Company in 1982.
Gerald F. Feeney Controller, Assistant Secretary and 49 		 Assistant Treasurer since 1976. 		 From 1970 to 1976, Mr. Feeney was 		 a manager with Peat Marwick Mitchell & Co.
Helen Mary Kasley Secretary and Legal Counsel since 42 		 1993. From 1990 to 1992, Mrs. Kasley 		 was Secretary. From 1986 to 1990, she was 		 an associate attorney with McCutchen, 		 Doyle, Brown & Enersen.
John S. Simpson Assistant Secretary since 1992. Mr. 49 		 Simpson has been Manager of New Business 		 Development for the past nine years 		 and has held various management positions 		 with the Company since 1967.
No officer or director has any family relationship to any other executive officer or director. No executive officer is appointed for any set term. There are no agreements or understandings between any executive officer and any other person pursuant to which he was selected as an executive officer, other than those with directors or officers of the Company acting solely in their capacities as such.
				 PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder 	 Matters.
	 The information required by this item is contained in the 	 section captioned "Quarterly Financial and Common Stock 	 Market Data" on page 26 of the Company's 1993 Annual Report 	 and is incorporated herein by reference. The number of 	 holders listed in such section includes the Company's record 	 holders and also individual participants in security position 	 listings.
Item 6.
Item 6. Selected Financial Data.
	 The information required by this item is contained in the 	 section captioned "California Water Service Company Ten Year 	 Financial Review" on pages 12 and 13 of the Company's 1993 	 Annual Report and is incorporated herein by reference.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition 	 and Results of Operations.
	 The information required by this item is contained in the 	 sections captioned "Management's Discussion and Analysis of 	 Financial Condition and Results of Operations," on pages 14 	 and 15 of the Company's 1993 Annual Report and is 	 incorporated herein by reference.
Item 8.
Item 8. Financial Statements and Supplementary Data.
	 The information required by this item is contained in the 	 sections captioned "Balance Sheet," "Statement of Income," 	 "Statement of Common Shareholders' Equity," "Statement of 	 Cash Flows," "Notes to Financial Statements" and "Independent 	 Auditors' Report" on pages 16 through 27 of the Company's 	 1993 Annual Report and is incorporated herein by reference.
Item 9.
Item 9. Changes in and Disagreements with Accountants on 	 Accounting and Financial Disclosure.
	 None.
				PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
	 Information regarding executive officers of the Company is 	 included in a separate item captioned "Executive Officers of 	 the Registrant" contained in Part I of this report. The 	 information required by this item as to directors of the 	 Company is contained in the section captioned "Election of 	 Directors" on pages 2 through 5 of the Proxy Statement and 	 is incorporated herein by reference. (The proxy statement 	 was filed under EDGAR on March 14, 1994).
Item 11.
Item 11. Executive Compensation.
	 The information required by this item as to directors and 	 executive officers of the Company is contained in the 	 section captioned "Compensation of Executive Officers" on 	 pages 7 and 8 of the Proxy Statement and is incorporated 	 herein by reference. (The proxy statement was filed under 	 EDGAR on March 14, 1994).
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and 	 Management.
	 The information required by this item is contained in the 	 sections captioned "Election of Directors," "Security 	 Ownership of Certain Beneficial Owners" and "Security 	 Ownership of Management" pages 2 through 4 and 12 and 13, 	 respectively, of the Proxy Statement and is incorporated 	 herein by reference. (The proxy statement was filed under 	 EDGAR on March 14, 1994).
Item 13.
Item 13. Certain Relationships and Related Transactions.
	 None.
				PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and 	 Reports on Form 8-K.
	 (a) (1) Financial Statements:
	 Balance Sheet as of December 31, 1993 and 1992.
	 Statement of Income for the years ended 	 December 31, 1993, 1992, and 1991.
	 Statement of Common Shareholders' Equity for the 	 years ended December 31, 1993, 1992, and 1991.
	 Statement of Cash Flows for the years 	 ended December 31, 1993, 1992, and 1991.
	 Notes to Financial Statements, December 31, 	 1993, 1992, and 1991.
	 The above financial statements are contained in 	 sections bearing the same captions on pages 16 	 through 26 of the Company's 1993 Annual Report 	 and are incorporated herein by reference.
	 (2) Financial Statement Schedules:
	 Schedule 	 Number
		 - Independent Auditors' Report 			 on Schedules, January 21, 1994.
		 V Property, Plant, and Equipment -- 			 years ending December 31, 1993, 			 1992, and 1991.
		VI Accumulated Depreciation of Property, 			 Plant, and Equipment--years ending 			 December 31, 1993, 1992, and 1991.
	 VIII Valuation and Qualifying Accounts and 			 Reserves--years ending December 31, 1993, 1992, 			 and 1991.
		 X Supplementary Income Statement 			 Information--years ending December 31, 			 1993, 1992, and 1991.
	 	 All other schedules are omitted as the required 	 information is inapplicable or the information is 	 presented in the financial statements or related 	 notes.
	 (3) Exhibits required to be filed by Item 601 of 	 Regulation S-K.
	 See Exhibit Index on page 27 of this document which is 	 incorporated herein by reference.
	 The exhibits filed herewith are attached hereto (except as 	 noted) and those indicated on the Exhibit Index which are 	 not filed herewith were previously filed with the Securities 	 and Exchange Commission as indicated. Except where stated 	 otherwise, such exhibits are hereby incorporated by 	 reference.
	 Exhibits filed herewith and attached hereto under separate 	 cover will be furnished to security holders of the Company 	 upon written request and payment of a fee of $.30 per page 	 which fee covers only the Company's reasonable expenses in 	 furnishing such exhibits.
	 (b) Report on Form 8-K.
	 None required to be filed during the last quarter of 1993.
			 			 SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
				 CALIFORNIA WATER SERVICE COMPANY
Date: March 16, 1994 By /s/ Donald L. Houck 				 DONALD L. HOUCK, President and 				 Chief Executive Officer
	 Pursuant to the requirements of the Securities Exchange 	 Act of 1934, this report has been signed below by the 	 following persons on behalf of the registrant and in the 	 capacities and on the dates indicated:
Date: March 16, 1994 /s/ William E. Ayer 				 WILLIAM E. AYER, Member, 				 Board of Directors
Date: March 16, 1994 /s/ Robert W. Foy 				 ROBERT W. FOY, Member, 				 Board of Directors
Date: March 16, 1994 /s/ Edward D. Harris, Jr. 				 EDWARD D. HARRIS, JR. M.D., Member, 				 Board of Directors
Date: March 16, 1994 /s/ Donald L. Houck 				 DONALD L. HOUCK 				 President, Chief Executive 				 Officer, Member, 				 Board of Directors
Date: March 16, 1994 /s/ Robert K. Jaedicke 				 ROBERT K. JAEDICKE, Member, 				 Board of Directors
Date: March 16, 1994 /s/ Roscoe Moss, Jr. 				 ROSCOE MOSS, JR., Member, 				 Board of Directors
				/s/ 				 L. W. LANE, JR., Member, 				 Board of Directors
Date: March 16, 1994 /s/ C. H. Stump 				 C. H. STUMP, Chairman of the 				 Board, Member, Board of Directors
Date: March 16, 1994 /s/ Edwin E. Van Bronkhorst 				 EDWIN E. VAN BRONKHORST, Member, 				 Board of Directors
Date: March 16, 1994 /s/ Harold C. Ulrich 				 HAROLD C. ULRICH, 				 Vice President, Chief Financial 				 and Treasurer
Date: March 16, 1994 /s/ Gerald F. Feeney 				 GERALD F. FEENEY, Controller
	 Independent Auditors' Report on Schedules
Shareholders and Board of Directors California Water Service Company :
Under date of January 21, 1994, we reported on the balance sheets of California Water Service Company as of December 31, 1993 and 1992, and the related statements of income, common shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in the 1993 annual report to shareholders. These financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement Schedules V, VI, VIII and X. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
San Jose, California /s/ KPMG Peat Marwick January 21, 1994
			 EXHIBIT INDEX 							Sequential 							Page Numbers Exhibit Number in this Report
3. Articles of Incorporation and By Laws:
3.1 Restated Articles of Incorporation dated 	 March 20, 1968, Certificate of Ownership 	 Merging Palos Verdes Water Company into 	 California Water Service Company dated 	 December 22, 1972; Certificate of Amendment 	 of Restated Articles of Incorporation dated 	 April 7, 1975; Certificate of Amendment of 	 Restated Articles of Incorporation dated 	 April 16, 1984; Certificate of Amendment of 	 Restated Articles of Incorporation dated 	 July 31, 1987; Certificate of Amendment of 	 Restated Articles of Incorporation dated 	 October 19, 1987 (Exhibit 3.1 to Form 10-K 	 for fiscal year 1987, File No. 0-464). 28
3.2 Certificates of Determination of Preferences 	 for Series C Preferred Stock (Exhibit 3.2 to 	 Form 10-K for fiscal year 1987, File No. 	 0-464). 28 							
3.3 Certificate of Amendment of the Company's 	 Restated Articles of Incorporation dated 	 April 27, 1988. (Exhibit 3.3 to Form 10-K 	 for fiscal year 1989, File No. 0-464). 28 							
3.4 By-Laws dated September 21, 1977, as amended 	 November 19, 1980, April 21, 1982, June 15, 	 1983, September 17, 1984, and November 16, 	 1987 (Exhibit 3.3 to Form 10-K for fiscal 	 year 1987, File No. 0-464). 28 							
3.5 Amendment to By-laws dated May 16, 1988. 	 (Exhibit 3.5 to Form 10-K for fiscal year 	 1991, File No. 0-464) 28 							
4. Instruments Defining the Rights of Security Holders, including Indentures:
Mortgage of Chattels and Trust Indenture dated April 1, 1928; Fifteenth Supplemental Indenture dated November 1, 1965; Sixteenth Supplemental Indenture dated November 1, 1966; Seventeenth Supplemental Indenture dated November 1, 1967;
Twenty-First Supplemental Indenture dated October 1, 1972; Twenty-Fourth Supplemental Indenture dated November 1, 1973; (Exhibits 2(b), 2(c), 2(d), Registration Statement No. 2-53678, of which certain exhibits are incorporated by reference to Registration Statement Nos. 2-2187, 2-5923, 2-9681, 2-10517 and 2-11093.) 29 							 Twenty-Sixth Supplemental Indenture dated May 1, 1976 (Exhibit 4 to Form 10-K for fiscal year 1986, File No. 0-464). 29 							 Twenty-Seventh Supplemental Indenture dated November 1, 1977; Twenty-Eighth Supplemental Indenture dated May 1, 1978; Twenty-Ninth Supplemental Indenture dated November 1, 1979 (Exhibit 4 to Form 10-K for fiscal year 1989, File No. 0-464). 29 							 Thirty-Third Supplemental Indenture dated as of May 1, 1988, covering First Mortgage 9.48% Bonds, Series BB (Exhibit 4 to Form 10-Q September 30, 1988, File No. 0-464) 29 							 Thirty-Fourth Supplemental Indenture dated as of November 1, 1990, covering First Mortgage 9.896% Bonds, Series CC (Exhibit 4 to Form 10-K for fiscal year 1990, File No. 0-464). 29 							 Thirty-Fifth Supplemental Indenture dated as of November 1, 1992, covering First Mortgage 8.63% Bonds, Series DD. (Exhibit 4 to Form 10-Q for dated September 30, 1992, File No. 0-464) 29 							 Thirty-Sixth Supplemental Indenture dated as of May 1, 1993, covering First Mortgage 7.90% Bonds Series EE (Exhibit 4 to Form 10-Q dated June 30, 1993, File No. 0-464) 29 							 Thirty-Seventh Supplemental Indenture dated as of September 1, 1993, covering First Mortgage 6.95% Bonds, Series FF (Exhibit 4 to Form 10-Q dated September 30, 1993, File No. 0-464) 29
Thirty-Eighth Supplemental Indenture dated as of October 15, 1993, covering First Mortgage 6.98% Bonds, Series GG. 33 							
						 Sequential 						 Page Numbers Exhibit No. in this Report
10. Material Contracts.
10.1 Water Supply Contracts: Supply Contract 30 	 between the Company and Alameda County 	 Flood Control and Water Conservation 	 District relating to the Company's 	 Livermore District; Water Supply Contract 	 between the Company and the County of 	 Butte relating to the Company's Oroville 	 District; Water Supply Contract between 	 the Company and the Kern County Water 	 Agency relating to the Company's Bakersfield 	 District; Water Supply Contract between 	 the Company and Stockton East Water 	 District relating to the Company's Stockton 	 District. (Exhibits 5(g), 5(h), 5(i), 5(j), 	 Registration Statement No. 2-53678, which 	 incorporates said exhibits by reference to 	 Form 1O-K for fiscal year 1974, File No. 0-464).
10.2 Settlement Agreement and Master Water Sales 30 	 Contract between the City and County of San 	 Francisco and Certain Suburban Purchasers 	 dated August 8, 1984; Supplement to 	 Settlement Agreement and Master Water 	 Sales Contract, dated August 8, 1984; Water 	 Supply Contract between the Company and the 	 City and County of San Francisco relating to 	 the Company's Bear Gulch District dated 	 August 8, 1984; Water Supply Contract 	 between the Company and the City and County 	 of San Francisco relating to the Company's 	 San Carlos District dated August 8, 1984; 	 Water Supply Contract between the Company 	 and the City and County of San Francisco 	 relating to the Company's San Mateo District 	 dated August 8, 1984; Water Supply Contract 	 between the Company and the City and County 	 of San Francisco relating to the Company's 	 South San Francisco District dated August 8, 	 1984. (Exhibit 10.2 to Form lO-K for fiscal 	 year 1984, File No. 0-464).
						 Sequential 						 Page Numbers Exhibit Number in this Report
10.3 Water Supply Contract dated January 27, 31 	 1981, between the Company and the Santa 	 Clara Valley Water District relating to 	 the Company's Los Altos District 	 (Exhibit 10.3 to Form 10-K for fiscal 	 year 1992, File No. 0-464)
10.4 Amendment dated November 28, 1979, to 31 	 Water Supply Contract between the Company 	 and Alameda County Flood Control and 	 Water Conservation District relating to 	 the Company's Livermore District. 	 (Exhibit 10.4 to Form 10-K for fiscal 	 year 1992, File No. 0-464)
10.5 Amendments No. 3, 6 and 7 and Amendment 31 	 dated June 17, 1980, to Water Supply 	 Contract between the Company and the 	 County of Butte relating to the Company's 	 Oroville District. (Exhibit 10.5 to Form 	 10-K for fiscal year 1992, File No. 	 0-464)
10.6 Amendment dated May 31, 1977, to Water 31 	 Supply Contract between the Company and 	 Stockton-East Water District relating to 	 the Company's Stockton District. 	 (Exhibit 10.6 to Form 10-K for fiscal 	 year 1992, File No. 0-464)
10.7 Second Amended Contract dated September 25, 31 	 1987 among the Stockton East Water District, 	 the California Water Service Company, the 	 City of Stockton, the Lincoln Village 	 Maintenance District, and the Colonial Heights 	 Maintenance District Providing for the Sale of 	 Treated Water. (Exhibit 10.7 to Form 10-K for 	 fiscal year 1987, File No. 0-464).
10.8 Dividend Reinvestment Plan. (Exhibit 10.8 to 31 	 Form 10-K for fiscal year 1991, File No. 0-464)
10.9 Water Supply Contract dated April 19, 1927, 31 	 and Supplemental Agreement dated June 5, 	 1953, between the Company and Pacific Gas 	 and Electric Company relating to the 	 Company's Oroville District. (Exhibit 10.9 	 to Form 10-K for fiscal year 1992, File No. 	 0-464)
10.10 California Water Service Company Pension Plan 31 	 (Exhibit 10.10 to Form 10-K for fiscal year 	 1992, File No. 0-464)
						 Sequential 						 Page Numbers Exhibit Number in this Report
10.11 California Water Service Company Supplemental 	 Executive Retirement Plan. (Exhibit 10.11 to 	 Form 10-K for fiscal year 1992, File No. 0-464) 32
10.12 California Water Service Company Salaried 	 Employees' Savings Plan. (Exhibit 10.12 	 to Form 10-K for fiscal year 1992, File 	 No. 0-464) 32
10.13 California Water Service Company 	 Directors Deferred Compensation Plan 	 (Exhibit 10.13 to Form 10-K for fiscal 	 year 1992, File No. 0-464) 32
10.14 Board resolution setting forth 	 the terms of the retirement plan, 	 as amended, for Directors of 	 California Water Service Company 	 (Exhibit 10.14 to Form 10-K for 	 fiscal year 1992, File No. 0-464) 32
13. Annual Report to Security Holders, Form 1O-Q or Quarterly Report to Security Holders:
	 1993 Annual Report. The sections of the 	 1993 Annual Report which are incorporated 	 by reference in this 10-K filing. This 	 includes those sections referred to in 	 Part II, Item 5, Market for Registrant's 	 Common Equity and Related Shareholder 	 Matters; Part II, Item 6, Management's 	 Financial Data; Part II, Item 7, 	 Management's Discussion and Analysis of 	 Financial Condition and Results of 	 Operations; and Part II, Item 8, 	 Financial Statement and Supplementary 	 Data. 86
RECORDING REQUESTED BY AND MAIL TO:
California Water Service Company P.O. Box 1150 San Jose, California 95108-1150 Attention: Helen M. Kasley, Secretary
			 SUPPLEMENTAL MORTGAGE OF CHATTELS
					 AND
				 TRUST INDENTURE
			(Thirty-Eighth Supplemental Indenture)
				 ------------
			 CALIFORNIA WATER SERVICE COMPANY
					 to
			 BANK OF AMERICA NATIONAL TRUST AND
				 SAVINGS ASSOCIATION
				 Trustee
				 ------------
			 Dated as of October 15, 1993
Section Page
PARTIES................................................................ 1
RECITALS............................................................... 1 Execution and recordation of Original Indenture, dated April 1, 1928. 1 Change of name of Los Angeles-First National Trust & Savings Bank............................................................... 2 Change of name of American Trust Company............................. 2 Resignations of Wells Fargo Bank, National Association and Security Pacific National Bank, as trustees, and appointment of Bank of America National Trust and Savings Association, as successor trustee............................................................ 2 Execution of thirty-seven supplemental indentures.................... 3 Recordation of thirty-seven supplemental indentures.................. 4 Amount of bonds heretofore issued and now outstanding................ 5 Authorization of Original Indenture, as amended, of issuance of bonds in series and requirements for creation of new series.............. 6 Proposal of Company to issue additional bonds of new series, prescribe terms thereof and confirm lien of Original Indenture and thirty-seven prior supplemental indentures...................................... 6 Desire of Company to describe specifically additional properties acquired since date of Thirty-Seventh Supplemental Indenture................ 7 Authorization of Thirty-Eighth Supplemental Indenture by Company..... 7 Compliance with all conditions and requirements for validity of Thirty- Eighth Supplemental Indenture...................................... 7 Execution of Bond Purchase Agreements................................ 7
GRANTING CLAUSE...................................................... 7 Schedule I--Properties under prior indentures...................... 8 Properties described in prior indentures but subsequently released 8 Schedule II--Properties now owned or acquired...................... 8 1. Real estate................................................... 8 2. Franchises, rights-of-way, rights and privileges.............. 8 Schedule III--Other property now owned............................. 9 Right to retain possession and dispose of certain intangible and other property......................................................... Schedule IV--After-acquired property............................... 9 Franchises, permits, licenses, rights, etc......................... 10 Tenements, hereditaments, appurtenances, etc....................... 10 Express condition that subjection of properties to lien shall not render them unavailable for use under Indenture......................... 10
HABENDUM CLAUSE...................................................... 11
USES AND TRUSTS...................................................... 11
AGREEMENT OF COMPANY AND TRUSTEE..................................... 11
				 i 34
					--------
					 PART I
				 SERIES GG BONDS
	 ARTICLE I--CREATION OF AND PARTICULARS OF SERIES GG BONDS
Section Page
1. Creation and Designation....................................... 12 2. Terms of Series GG Bonds....................................... 12 3. Form of Series GG Bonds........................................ 16 	 Form of registered bond without coupons of Series GG........ 17 	 Form of trustee's certificate of authentication............. 21
			ARTICLE II--ISSUE OF BONDS
1. Conditions Applicable to Issuance of Series GG Bonds........... 22
			ARTICLE III--REDEMPTION 	 1. Right to Redeem; Redemption Prices............................. 22 2. Notice and Manner of Redemption................................ 22
			ARTICLE IV--SINKING FUND 	 1. Amount and Time of Payment..................................... 23 2. Application of Sinking Fund Cash to Redemption of Bonds........ 23 3. Limitations on Use of Sinking Fund Cash in Case of Default..... 24 4. Sinking Funds for Bonds of Other Series........................ 24
				 ii 35
					 --------
					 PART II
			 MISCELLANEOUS PROVISIONS WITH RESPECT TO 				 SUPPLEMENTAL INDENTURE
Section Page
1. The Trustee....................................................... 24 2. Destruction of Bonds.............................................. 24 3. Separability of Invalid Provisions................................ 25 4. Effect on Successors and Assigns of Parties....................... 25 5. Immunity of Incorporators, Stockholders, Officers and Directors... 25 6. Titles Not Part of Supplemental Indenture......................... 25 7. Counterparts...................................................... 25 8. Title to Property; Authority to Mortgage; Prior Liens............. 26
ATTESTATION........................................................... 26
EXECUTION............................................................. 26
ACKNOWLEDGMENT OF COMPANY............................................. 27
ACKNOWLEDGMENT OF BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION............................................. 28
SCHEDULE A--Recording Data as to Resignations of Wells Fargo Bank, National Association and Security Pacific National Bank, as Trustees, and Appointment of Bank of America National Trust and Savings Association as Successor Trustee............................ 29
SCHEDULE B--Recording Data as to Supplemental Indentures.............. 30
SCHEDULE C--Properties Released Since September 1, 1993............... 48
SCHEDULE D--Real Estate Acquired by the Company Since September 1, 1993 or Otherwise Not Included in the Original Indenture or any Supplemental Indenture.................... 49
				 iii 36
			 SUPPLEMENTAL MORTGAGE OF CHATTELS
				 AND TRUST INDENTURE
			 Thirty-Eighth Supplemental Indenture
					 --------
THIS SUPPLEMENTAL INDENTURE, made and entered into as of the 15th day of October, 1993, by and between California Water Service Company, a corporation organized and existing under and by virtue of the laws of the State of California, and having its principal place of business in the City of San Jose, County of Santa Clara, State of California, by occupation a public utility water company (hereinafter called the "Company"), party of the first part, and Bank of America National Trust and Savings Association, a national banking association created, organized and existing under and by virtue of the laws of the United States of America, and having corporate trust offices in the cities of Los Angeles and San Francisco, State of California (hereinafter sometimes called the "Trustee").
Whereas, the Company heretofore made, executed and delivered that certain indenture, California Water Service Company to American Trust Company and Los Angeles-First National Trust & Savings Bank, as trustees, dated as of the 1st day of April, 1928 (hereinafter sometimes called the "Original Indenture"), which indenture has been recorded in the offices of the Recorders of the following counties and city and county of the State of California on the respective dates and in the respective books of record hereinafter set forth as follows:
				 1 37
					 Vol. of Page at 					 Official Records Which 	County or Date of (except as Record City and County Recordation noted) Commences
Contra Costa............. May 2, 1928 141 7 City and County of San Francisco.......... May 3, 1928 1637 346 							 (Book of Glenn.................... May 2, 1928 62 Mortgages) 190 Kings.................... Jan. 7, 1929 40 348 San Joaquin.............. May 2, 1928 243 295 Solano................... May 2, 1928 14 7 Tulare................... May 3, 1928 260 11 Alameda.................. May 2, 1928 1877 35 Sonoma................... May 2, 1928 196 136 Los Angeles.............. May 4, 1928 7105 102 							 (Book of Butte.................... May 2, 1928 116 Mortgages) 106 Kern..................... May 3, 1928 249 1 Shasta................... May 2, 1928 38 80 Fresno................... May 2, 1928 894 32 San Mateo................ Jan. 20, 1939 837 16 Yuba..................... Sept. 12, 1942 69 291 Santa Clara.............. Nov. 2, 1945 1305 286 Monterey................. Feb. 21, 1962 23 (Reel) 1;
and
Whereas, Los Angeles-First National Trust & Savings Bank changed its name to Security-First National Bank of Los Angeles and later to Security First National Bank and later to Security Pacific National Bank; and
Whereas, American Trust Company changed its name to Wells Fargo Bank-American Trust Company and later to Wells Fargo Bank and Wells Fargo Bank subsequently merged into Wells Fargo Bank, National Association; and
Whereas, by instrument entitled "Resignations of Wells Fargo Bank, National Association as Authenticating Trustee and Security Pacific National Bank as Trustee and Appointment and Acceptance of Bank of America National Trust and Savings Association as Authenticating Trustee under Mortgage of Chattels and Trust Indenture Dated as of April 1, 1928 As Supplemented, Amended and Modified from California Water Service Company" dated as of August 1, 1983, recorded in the offices of the Recorders of those counties and city and county of the State of California on the respective dates and in the respective books of record and/or as the respective document numbers set forth in SCHEDULE A, which is annexed hereto and hereby made a part hereof, Wells Fargo Bank, National Association resigned as authenticating trustee under the Original Indenture, as theretofore supplemented, amended and modified by thirty-one supplemental indentures, effective August 1, 1983, the Company
				 2 38
appointed Bank of America National Trust and Savings Association as successor authenticating trustee to Wells Fargo Bank, National Association, effective August 1, 1983, Bank of America National Trust and Savings Association accepted such appointment as authenticating trustee under the Original Indenture, as theretofore supplemented, amended and modified by thirty-one supplemental indentures, effective August 1, 1983, Security Pacific National Bank resigned as trustee under the Original Indenture, as theretofore supplemented, amended and modified by thirty-one supplemental indentures, effective August 1, 1983, the Company appointed no successor trustee to said Security Pacific National Bank, Bank of America National Trust and Savings Association as of August 1, 1983 became fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of Wells Fargo Bank, National Association and Security Pacific National Bank, as trustees under the Original Indenture, as theretofore supplemented, amended and modified by thirty-one supplemental indentures, with like effect as if originally named as trustee therein, and Bank of America National Trust and Savings Association is now the authenticating trustee under the Original Indenture, as supplemented, amended and modified by the First through Thirty-Seventh Supplemental Indentures referred to below and by this supplemental indenture (hereinafter sometimes called the "Thirty-Eighth Supplemental Indenture"), said Original Indenture as so supplemented, amended and modified being hereinafter called the "Indenture"; and
Whereas, the Company has heretofore made, executed and delivered thirty-seven certain supplemental indentures supplemental to said Original Indenture, to-wit, one such supplemental indenture from said California Water Service Company to said American Trust Company and said Los Angeles-First National Trust & Savings Bank, as trustees, dated January 3, 1929, hereinafter sometimes called the "First Supplemental Indenture;" twelve such supplemental indentures from said California Water Service Company to said American Trust Company and said Security-First National Bank of Los Angeles, as trustees, dated and hereinafter sometimes called, respectively, as follows:
		 Date Name
	 August 19, 1929 Second Supplemental Indenture 	 February 25, 1930 Third Supplemental Indenture 	 February 1, 1931 Fourth Supplemental Indenture 	 March 23, 1932 Fifth Supplemental Indenture 	 May 1, 1936 Sixth Supplemental Indenture 	 April 1, 1939 Seventh Supplemental Indenture 	 November 1, 1945 Eighth Supplemental Indenture 	 May 1, 1951 Ninth Supplemental Indenture 	 May 1, 1953 Tenth Supplemental Indenture 	 May 1, 1954 Eleventh Supplemental Indenture 	 May 1, 1955 Twelfth Supplemental Indenture 	 November 1, 1956 Thirteenth Supplemental Indenture;
four such supplemental indentures from said California Water Service Company to said Wells Fargo Bank and said Security First National Bank, as trustees, dated and hereinafter sometimes called, respectively, as follows:
				 3 39
		 Date Name
	 November 1, 1963 Fourteenth Supplemental Indenture 	 November 1, 1965 Fifteenth Supplemental Indenture 	 November 1, 1966 Sixteenth Supplemental Indenture 	 November 1, 1967 Seventeenth Supplemental Indenture;
fourteen such supplemental indentures from said California Water Service Company to said Wells Fargo Bank, National Association and said Security Pacific National Bank, as trustees, dated and hereinafter sometimes called, respectively, as follows:
		 Date Name
	 November 1, 1969 Eighteenth Supplemental Indenture 	 May 1, 1970 Nineteenth Supplemental Indenture 	 November 1, 1970 Twentieth Supplemental Indenture 	 October 1, 1972 Twenty-First Supplemental Indenture 	 November 1, 1972 Twenty-Second Supplemental Indenture 	 November 15, 1972 Twenty-Third Supplemental Indenture 	 November 1, 1973 Twenty-Fourth Supplemental Indenture 	 May 1, 1975 Twenty-Fifth Supplemental Indenture 	 May 1, 1976 Twenty-Sixth Supplemental Indenture 	 November 1, 1977 Twenty-Seventh Supplemental Indenture 	 May 1, 1978 Twenty-Eighth Supplemental Indenture 	 November 1, 1979 Twenty-Ninth Supplemental Indenture 	 November 1, 1980 Thirtieth Supplemental Indenture 	 May 1, 1982 Thirty-First Supplemental Indenture;
and six such supplemental indentures from said California Water Service Company to said Bank of America National Trust and Savings Association, as trustee, dated and hereinafter sometimes called, respectively, as follows:
		 Date Name
	 September 1, 1983 Thirty-Second Supplemental Indenture 	 May 1, 1988 Thirty-Third Supplemental Indenture 	 November 1, 1990 Thirty-Fourth Supplemental Indenture 	 November 1, 1992 Thirty-Fifth Supplemental Indenture 	 May 1, 1993 Thirty-Sixth Supplemental Indenture 	 September 1, 1993 Thirty-Seventh Supplemental Indenture;
and
Whereas, said First through Thirty-Seventh Supplemental Indentures above mentioned have been recorded in the offices of the Recorders of those counties and city and county of the State of California on the respective dates and in the respective books of record and/or as the respective document numbers set forth in SCHEDULE B, which is annexed hereto and hereby made a part hereof; and
				 4 40
Whereas, under and pursuant to said Original Indenture and said supplemental indentures hereinabove mentioned, the Company has heretofore issued its bonds as follows:
								Principal 						 Total Amount 					 Aggregate Outstanding 					 Principal as of 	 Designation Amount October 14, 1993
First Mortgage 5% Gold Bonds, Series A (Heretofore redeemed and cancelled)..... $8,738,000 First Mortgage 4% Bonds, Series B (Heretofore redeemed and cancelled)..... 11,882,000 First Mortgage 3-1/4% Bonds, Series C (Heretofore redeemed and cancelled)..... 17,822,000 First Mortgage 3-5/8% Bonds, Series D (Heretofore redeemed and cancelled)..... 3,540,000 First Mortgage 4-1/8% Bonds, Series E (Heretofore redeemed and cancelled)..... 2,000,000 First Mortgage 3.35% Bonds, Series F (Heretofore redeemed and cancelled)..... 1,500,000 First Mortgage 3-3/4% Bonds, Series G (Heretofore redeemed and cancelled)..... 4,500,000 First Mortgage 4.60% Bonds, Series H (Heretofore redeemed and cancelled)..... 3,000,000 First Mortgage 4.65% Bonds, Series I...... 3,000,000 $2,565,000 First Mortgage 4.85% Bonds, Series J...... 3,000,000 2,596,000 First Mortgage 6-1/4% Bonds, Series K..... 3,000,000 2,610,000 First Mortgage 6-3/4% Bonds, Series L..... 2,500,000 2,189,000 First Mortgage 9-1/2% Bonds, Series M (Heretofore redeemed and cancelled)..... 2,500,000 First Mortgage 9-1/4% Bonds, Series N (Heretofore redeemed and cancelled)..... 3,000,000 First Mortgage 9-1/4% Bonds, Series O (Heretofore redeemed and cancelled)..... 3,000,000 First Mortgage 7-7/8% Bonds, Series P..... 3,000,000 2,700,000 First Mortgage 4-1/2% Bonds, Series Q (Heretofore redeemed and cancelled)..... 1,171,000 First Mortgage 6.6% Bonds, Series R....... 4,653,000 (Heretofore redeemed and cancelled)..... First Mortgage 8-1/2% Bonds, Series S..... 3,000,000 2,715,000 First Mortgage 8-3/4% Bonds, Series T (Heretofore redeemed and cancelled)..... 26,000,000 First Mortgage 9-1/4% Bonds, Series U (Heretofore redeemed and cancelled)..... 4,000,000 First Mortgage 8.60% Bonds, Series V...... 3,000,000 1,785,000 First Mortgage 9-3/8% Bonds, Series W (Heretofore redeemed and cancelled)..... 4,000,000
			 [continued on next page]
				 5 41
			 [continued from previous page]
								 Principal 						 Total Amount 					 Aggregate Outstanding 					 Principal as of 		Designation Amount October 14, 1993
First Mortgage 10% Bonds, Series X (Heretofore redeemed and cancelled)..... 5,000,000 First Mortgage 13% Bonds, Series Y (Heretofore redeemed and cancelled)..... 6,000,000 First Mortgage 16-1/4% Bonds, Series Z (Heretofore redeemed and cancelled)..... 5,000,000 First Mortgage 12-7/8% Bonds, Series AA... 35,000,000 33,425,000 First Mortgage 9.48% Bonds, Series BB..... 18,000,000 17,460,000 First Mortgage 9.86% Bonds, Series CC..... 20,000,000 19,700,000 First Mortgage 8.63% Bonds, Series DD..... 20,000,000 20,000,000 First Mortgage 7.90% Bonds, Series EE..... 20,000,000 20,000,000 First Mortgage 6.95% Bonds, Series FF..... 20,000,000 20,000,000;
and
Whereas, the Original Indenture, as amended by the Eighth Supplemental Indenture, authorizes the bonds issuable thereunder to be issued in one or more series and provides that before the authentication and delivery of any bonds of a series not theretofore created, the Company shall furnish the Authenticating Trustee (as defined therein) either a copy of a resolution certified by the Secretary or an Assistant Secretary under the corporate seal of the Company to have been duly adopted by the Board of Directors or a supplemental indenture authorized by a resolution in like manner certified to have been duly adopted by the Board of Directors, designating the new series to be created and prescribing the amount thereof, if limited, the authorized denominations, the currency or currencies in which and the rate or rates of exchange, if any, at which principal and interest are to be paid, the date and the date or dates of maturity thereof, the place or places where principal and interest are to be paid, rate of interest and dates on which payable, provisions, if any, as to deduction and/or reimbursement of taxes, terms and rates of redemption, if redeemable, terms and rates of conversion, if convertible, terms and rates of exchange, if exchangeable, any other particulars necessary to describe and define such series, any other provisions and agreements in respect thereof and the text of the bonds and coupons, if any; and
Whereas, the Company now proposes to issue additional bonds of a new series under and pursuant to and secured by the Original Indenture, as supplemented, amended and modified by the thirty-seven supplemental indentures hereinabove mentioned and particularly by the Eighth Supplemental Indenture, as more particularly provided in Article II thereof, and proposes to prescribe and provide herein the series designation, date, denominations, date of
				 6 42
maturity, rate of interest, interest payment dates, terms of redemption, sinking fund, place at which payable and other particulars, provisions and agreements in respect to said additional bonds and the form thereof and to confirm the lien and security of the Original Indenture and thirty-seven prior supplemental indentures with respect to such additional bonds; and
Whereas, the Company also desires specifically to describe herein additional properties which have been acquired by the Company since the date of the Thirty-Seventh Supplemental Indenture and are subject to the lien and charge of the Original Indenture and the thirty-seven prior supplemental indentures; and
Whereas, the Company, under and by virtue of the provisions of the Original Indenture, as amended by the Eighth Supplemental Indenture, and under and by virtue of appropriate resolutions of its Board of Directors, has duly resolved to make, execute and deliver to the Trustee this Thirty-Eighth Supplemental Indenture, in the form hereof for the purposes herein provided; and
Whereas, all conditions and requirements necessary to make this supplemental indenture a valid, binding and legal instrument in accordance with its terms have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized; and
Whereas, the Company expects to enter into agreements dated November 1, 1993 (the "Bond Purchase Agreements") with various prospective purchasers relating to the purchase of the Series GG bonds (as hereinafter defined);
Now, Therefore, This Supplemental Indenture Witnesseth: That California Water Service Company, in consideration of the premises and of the acceptance by the Trustee of the trusts hereinafter mentioned, and of the purchase and acceptance of the bonds hereinafter mentioned by the holders thereof, by way of further assurance to the Trustee and the holders of the bonds hereinafter mentioned and to confirm the lien and security of the Original Indenture and the thirty-seven prior supplemental indentures above described with respect to said bonds and to confirm the lien and security of the Original Indenture and the thirty-seven prior supplemental indentures on the properties acquired since the date of the Thirty-Seventh Supplemental Indenture hereinafter more specifically described and referred to for the benefit of all bonds issued and to be issued under the Original Indenture and/or any indenture supplemental thereto, and in order to secure the payment both of the principal and interest of the bonds hereinafter mentioned according to their tenor and effect and to secure the performance and observance by the Company of all the covenants and conditions in said bonds and in the Original Indenture, the thirty-seven prior supplemental indentures and in this Thirty-Eighth Supplemental Indenture contained, has granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over and confirmed, and by these presents does grant, bargain, sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto Bank of America National Trust and Savings Association, as trustee, and to its successors in the trust and to its assigns
				 7 43
forever, all those certain water systems, properties, premises, rights, franchises and interests (hereinafter sometimes referred to as the "mortgaged property" or the "trust estate"), more particularly described as follows:
				 SCHEDULE I.
		 Properties Under Prior Indentures
All properties, premises, rights, franchises and interests more particularly described in the Original Indenture and the First through Thirty-Seventh Supplemental Indentures, inclusive, referred to above, excepting therefrom, however, the following:
First: All properties shown in the First through Thirty-Seventh Supplemental Indentures, inclusive, to have been released.
Second: The properties, if any, described in SCHEDULE C, which is annexed hereto and hereby made a part hereof, which since September 1, 1993, have been sold, conveyed or otherwise disposed of by the Company and released and reconveyed by the Trustee under and pursuant to the terms and provisions of the Original Indenture, as amended by the Eighth Supplemental Indenture, or which have been condemned or taken by the power of eminent domain and are no longer subject to the lien of the Original Indenture or any supplement thereto.
				 SCHEDULE II.
			Properties Now Owned or Acquired
All other properties, premises, rights, franchises and interests now or at the date of delivery of these presents owned or acquired by the Company of whatever character and wherever situated. Said properties include, among other things, the following, but reference to or enumeration of any particular kinds, classes or items of property shall not be deemed to exclude from the operation and effect of this indenture any kind, class or item not so referred to or enumerated:
1. Real Estate. All those certain lots, pieces or parcels of land, if any, more particularly described in SCHEDULE D, which is annexed hereto and hereby made a part hereof.
2. Franchises, Rights-of-Way, Rights and Privileges. All franchises, permits, licenses, rights, easements, grants, privileges and immunities pertaining to or used or usable in connection with the water systems of the Company; all rights-of-way, water rights or privileges appurtenant to the lands, if any, described in SCHEDULE D or used or useable in connection therewith and all renewals, extensions or modifications of the foregoing.
				 8 44
Together with all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property, real estate, franchises, rights, privileges and other property or any part thereof; with the reversion and reversions, remainder and remainders, tolls, rents, revenues, issues, income, product and profits thereof, and all the estate, right, title, interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the same and every part and parcel thereof.
				 SCHEDULE III.
			 Other Property Now Owned
And together with all buildings, plants, systems, works, improvements, structures, fixtures, supplies, appliances, machinery, equipment, materials, transporting and distributing systems, filter systems, ditches, dams, water works, wells, pumps, reservoirs, conduits, pipes, mains, purifiers, washers, holders, boilers, engines, motors (but not motor vehicles), pipe lines, sewers, meters, services, fuel, office furniture, books, records, office supplies, tools, accounts receivable, bills receivable, cash on hand and in bank, and all personal property of every kind and nature whatsoever, appertaining to or useful in the conduct of the Company's present or future business, which the Company now owns, or in which it now has any interest; provided, however, that so long as the Company shall not be in default under the Original Indenture or any indenture supplemental thereto, it shall be entitled to retain in its possession all cash on hand or in bank, accounts receivable, bills receivable, materials and supplies and all shares of stock, bonds and other securities not specifically transferred or assigned to or pledged with the Trustee under the Original Indenture or any indenture supplemental thereto or required so to be and all proceeds of the sale, condemnation or other disposition of the same, and it shall have the power from time to time in its discretion, without reference to the Trustee to dispose of, free from the lien of the Original Indenture and any indenture supplemental thereto, any and all of said cash on hand or in bank, accounts receivable, bills receivable, materials and supplies and said shares of stock, bonds and other securities and proceeds of the same covered by the lien of the Original Indenture or any indenture supplemental thereto.
				 SCHEDULE IV.
			 After-Acquired Property
All properties, premises, rights, franchises and interests, of whatever character and wherever situated, hereafter acquired by the Company, including, without limiting the generality of the foregoing description, all "new or additional property" and all "permanent improvements, extensions or additions" (as those terms are used in subdivision (A) of Section 2.03 of Part II of the Eighth Supplemental Indenture) hereafter acquired or constructed by the
				 9 45
Company, whether fully constructed or erected or in the process of construction or erection, so far as actually constructed or erected, together with all buildings, plants, systems, works, improvements, structures, fixtures, supplies, appliances, machinery, equipment, materials, transporting and distributing systems, filter systems, ditches, dams, water works, wells, pumps, reservoirs, conduits, pipes, mains, purifiers, washers, holders, boilers, engines, motors (but not motor vehicles), pipe lines, sewers, meters, services, fuel, office furniture, books, records, office supplies, tools, accounts receivable, bills receivable, cash on hand and in bank, and all personal property of every kind and nature whatsoever appertaining to or useful in the conduct of the Company's present or future business, which the Company may hereafter acquire or in which it may have any interest; provided, however, that so long as the Company shall not be in default under the Original Indenture or any indenture supplemental thereto, it shall be entitled to retain in its possession all cash on hand or in bank, accounts receivable, bills receivable, materials and supplies and all shares of stock, bonds and other securities not specifically transferred or assigned to or pledged with the Trustee under the Original Indenture or any indenture supplemental thereto or required so to be and all proceeds of the sale, condemnation or other disposition of the same and it shall have the power from time to time in its discretion, without reference to the Trustee to dispose of, free from the lien of the Original Indenture and any indenture supplemental thereto, any and all of said cash on hand or in bank, accounts receivable, bills receivable, materials and supplies and said shares of stock, bonds and other securities and proceeds of the same covered by the lien of the Original Indenture or any indenture supplemental thereto.
Together with all franchises, permits, licenses, rights, easements, grants, privileges and immunities, pertaining to or used or usable in connection with said "new or additional property" and said "permanent improvements, extensions or additions"; all rights-of-way, water rights or privileges appurtenant to said "new or additional property" and said "permanent improvements, extensions or additions" or used or usable in connection therewith, and all renewals, extensions or modifications of any of the foregoing.
Together with all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid "new or additional property" and "permanent improvements, extensions or additions," franchises, rights, privileges and other property, or any part thereof; with the reversion and reversions, remainder and remainders, tolls, rents, revenues, issues, income, product and profits thereof, and all the estate, right, title, interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the same and every part and parcel thereof.
Provided, however, that nothing herein contained is intended or shall be deemed to, and the conveyance and mortgage hereby made is upon the express condition that it shall not, render any such "new or additional property" or "permanent improvements, extensions or additions" unavailable under the
				 10 46
Original Indenture, or any indenture supplemental thereto, or any provision of any thereof, (a) as a basis for the issue, authentication and delivery of additional bonds, or for the withdrawal of any money held by the Trustee under the Original Indenture, or any indenture supplemental thereto or by any trustee under an instrument of lien prior to the lien of the Original Indenture, or (b) as substituted property with reference to the release of property from the lien of the Original Indenture or any indenture supplemental thereto, or (c) as used or usable to provide any increase required by the provisions of subparagraphs (2) and/or (3) of Section 2.04 of Part II of the Eighth Supplemental Indenture, or (d) as used or usable as a credit against any sinking fund provided for in any instrument of lien prior to the lien of the Original Indenture, or provided for in any indenture supplemental to the Original Indenture, or (e) for any other purpose for which it is provided in the Original Indenture, as amended by the Eighth Supplemental Indenture, that the Company may use said "new or additional property" or "permanent improvements, extensions or additions."
To have and to hold all the hereinbefore described properties, real, personal and mixed, mortgaged, conveyed, assigned or pledged by the Company, or intended so to be, unto the Trustee and its successors in the trusts hereby and by the Original Indenture and by the prior supplemental indentures created, and to its assigns forever;
In trust nevertheless upon the terms and trusts set forth in the Original Indenture, as supplemented, amended and modified by the thirty-seven prior supplemental indentures hereinabove mentioned and particularly by the Eighth Supplemental Indenture, and set forth in this Thirty-Eighth Supplemental Indenture, and for the benefit and security of the holders of the bonds and coupons issued and to be issued under the Original Indenture and/or any indenture supplemental thereto, without preference of any said bonds and coupons over any others thereof by reason of priority in the time of issue or negotiation thereof or by reason of the date of maturity thereof, or for any reason whatsoever (subject, however, to the provisions of Section 3.02 of Part II of the Eighth Supplemental Indenture), and upon and subject to the covenants, conditions, uses and trusts set forth in the Original Indenture, as supplemented, amended and modified by the thirty-seven prior supplemental indentures hereinabove mentioned and particularly by the Eighth Supplemental Indenture, and in this Thirty-Eighth Supplemental Indenture, all with the same force and effect as though the hereinabove described properties, real estate, franchises, rights, privileges and other property were included in the granting clauses of the Original Indenture.
And it is hereby covenanted, declared and agreed, by and between the parties hereto, that all bonds of Series GG hereinafter described are to be issued, authenticated and delivered and that all property subject or to become subject hereto is to be held and applied subject to the further covenants, conditions, uses and trusts hereinafter set forth; and the Company, for itself, its successors and assigns, does hereby covenant and agree to and with the Trustee, for the benefit of those who shall hold said bonds, or any of them, or any bonds or interest coupons issued or to be issued under the Original Indenture and/or any indenture supplemental thereto as follows:
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				 PART I.
			 SERIES GG BONDS
				 ARTICLE I.
	 Creation of and Particulars of Series GG Bonds
Section 1. Creation and Designation. There shall be and hereby is created a new series of bonds of the Company to be designated as hereinafter set forth in the title of the form of bond contained in Section 3 of Article I hereof, and to be issued under this Thirty-Eighth Supplemental Indenture and under and subject to and in accordance with the terms and conditions of the Original Indenture, as supplemented by this Thirty-Eighth Supplemental Indenture, and as supplemented, amended and modified by the thirty-seven prior supplemental indentures and particularly by the Eighth and Ninth Supplemental Indentures. For convenience in designation said bonds are hereinafter sometimes referred to as "Series GG bonds" or "bonds of Series GG."
Section 2. Terms of Series GG Bonds. The following matters are hereby prescribed with reference to Series GG bonds:
	(a) The aggregate principal amount of Series GG bonds shall be limited to Twenty Million Dollars ($20,000,000), except for bonds authenticated and delivered upon transfer of, or in exchange for, or in lieu of, other bonds pursuant to Sections 3 and 6 of Part II of the Ninth Supplemental Indenture and subdivisions (o), (p), and (q) of this Section 2.
	(b) Notwithstanding the provisions of Section 1 of Part II of the Ninth Supplemental Indenture, the definitive Series GG bonds shall be only in the form of registered bonds without coupons in the denomination of $1,000 and any denominations that are multiples of $1,000, to be substantially of the tenor and purport as recited in Section 3 of this Article I, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements typed, printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of the Indenture. The Series GG bonds shall be exchangeable and transferable for registered bonds without coupons of the several denominations at the corporate trust office of Bank of America National Trust and Savings Association, in the City of Los Angeles, State of California, in the manner and subject to the conditions in Section 3 of Part II of the Ninth Supplemental Indenture provided, except as otherwise provided in subdivisions (o), (p), (q), (r) and (s) of this Section 2.
				 12 48
(c) Principal, interest and premium, if any, of each of the Series GG bonds and all amounts payable in respect of the same under the Original Indenture or any indenture supplemental thereto shall be payable solely in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public or private debts.
(d) Notwithstanding any provisions whatsoever in the Original Indenture or any prior supplemental indenture, neither principal nor interest nor premium (if any) nor any other amount payable in respect of any of the Series GG bonds shall be payable in gold coin.
(e) Notwithstanding the provisions of Sections 2 and 3 of Part II of the Ninth Supplemental Indenture, each Series GG bond shall be dated the date of its authentication and, except as otherwise provided herein, shall bear interest (computed on the basis of a 360 day year of twelve 30 day months), payable semi-annually on May 1 and November 1 of each year, from the May 1 or November 1, as the case may be, next preceding the date of such bond to which interest has been paid, or if the date of such bond is the date to which interest has been paid, from the date of such bond, or, if no interest has been paid on the Series GG bonds, then from the date of authentication of the initial issue of Series GG bonds, until payment of the principal sum of such bond has been made or duly provided for. Notwithstanding the foregoing, when there is no existing default in the payment of interest on the Series GG bonds, all Series GG bonds authenticated by the Trustee after the close of business on the record date (as hereinafter defined) for any interest payment date (May 1 or November 1, as the case may be) and prior to such interest payment date, shall be dated the date of authentication and shall bear interest from such interest payment date; provided, however, that if and to the extent that the Company shall default in the interest due on such interest payment date, then such Series GG bond shall bear interest from the May 1 or November 1, as the case may be, next preceding the date of such Series GG bond to which interest has been paid or if no interest has been paid on the Series GG bonds, from the date of authentication of the initial issue of Series GG bonds. The term "record date" as used with respect to a semi-annual interest payment date shall mean the April 15 prior to such May 1 or the October 15 prior to such November 1, unless such April 15 or October 15 shall not be a business day, in which event the business day next preceding. The term "business day" as used herein shall mean a day which in said City of Los Angeles is neither a legal holiday nor a day on which banking institutions are authorized by law to close.
(f) The person in whose name any Series GG bond is registered at the close of business on the record date with respect to a semi-annual interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such bond upon any transfer or exchange thereof subsequent to such record date and prior to such interest payment date; provided, however, that if and to the
				 13 49
extent the Company shall default in the payment of the interest due on such interest payment date, such defaulted interest shall be paid to the persons in whose names the Series GG bonds are registered at the close of business on a record date established for such payment (which must be a date subsequent to the record date for the earliest interest payment date for which there is an outstanding default in payment) by notice by or on behalf of the Company to the holders of the Series GG bonds mailed by first-class mail not less than fifteen days prior to such record date to their last addresses as the same appear on the books maintained for such purpose by or on behalf of the Company.
(g) Notwithstanding the provisions of Section 3 of Part II of the Ninth Supplemental Indenture, the Company shall not be required to issue, register, transfer, or make exchanges of any Series GG bonds, which are to be redeemed pursuant to the provisions set forth in Article III of this Part I of this Thirty-Eighth Supplemental Indenture, within thirty (30) days prior to the date of redemption of such Series GG bonds.
(h) All of the Series GG bonds shall mature on November 1, 2023. Notwithstanding any provision in the Original Indenture, as amended by the Eighth and Ninth Supplemental Indentures, notice of maturity of the Series GG bonds stating that final payment will be made to the holders of the Series GG bonds only after surrender of the bonds to the Trustee for cancellation shall be delivered by the Company at least thirty days prior to the date of maturity of the Series GG bonds to the respective holders of the bonds at the addresses set forth on the books maintained for such purpose by or on behalf of the Company, or, if there then be in effect any home office payment agreement between the Company and any institutional holder of Series GG bonds designating a different address for such notice, to such institutional holder at such different address.
(i) All principal, interest and premiums, if any, of each and all of the Series GG bonds shall be payable at the corporate trust office of Bank of America National Trust and Savings Association, in the City of Los Angeles, State of California and may be paid by check to the order of the person entitled thereto mailed on the applicable payment date to such person's address as the same appears on the books maintained for such purpose by or on behalf of the Company, or, if there then be in effect any home office payment agreement between the Company and any particular institutional holder of Series GG bonds specifying a different address for or manner of payment, shall be paid to such institutional holder at such different address and in such different manner.
(j) Each of the Series GG bonds shall bear interest at the rate per annum set forth in the title of the form of bond contained in Section 3 of Article I hereof.
(k) Unless required by the laws of the United States of America or the State of California, the Series GG bonds shall not require the deduction or withholding by the Company of any taxes or any reimbursement of taxes to the bondholders.
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(l) The Series GG bonds shall be redeemable as hereinafter in Article III of this Part I of this Thirty-Eighth Supplemental Indenture provided.
(m) The Series GG bonds shall not be convertible into any class of stock or other type of security of the Company.
(n) The Series GG bonds shall have the benefit of the sinking fund hereinafter provided in Article IV of this Part I of this Thirty-Eighth Supplemental Indenture.
(o) A mutilated bond may be surrendered and, after the delivery to the Company and the Trustee of such security or indemnity as may be required by them to save them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new bond of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there be delivered to the Company and to the Trustee:
(i) evidence to their satisfaction of the destruction, loss or theft of any bond, and
(ii) such security or indemnity as may be required by them to save each of them harmless,
then, the Company shall execute and upon its request the Trustee shall authenticate and deliver in lieu of any such destroyed, lost or stolen bond, a new bond of like tenor and principal amount, bearing interest from the date to which interest has been paid on such destroyed, lost or stolen bond or from the date of such destroyed, lost or stolen bond if no interest has been paid thereon, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen bond has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new bond, pay such bond. Upon the issuance of any new bond under this subdivision, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including fees and expenses of the Trustee) connected therewith; provided, however, that the Company shall pay all such taxes or other governmental charges and all such other expenses (including the fees and expenses of the Trustee) connected with the issuance under this subdivision of any new bond to any institutional holder. Every new bond issued pursuant to this subdivision in lieu of any destroyed, lost or stolen bond shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen bond shall be at any time enforceable by anyone, and shall be entitled to all the benefits of the Indenture equally and proportionately with any and all other bonds duly issued hereunder. The provisions of this subdivision are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen bonds.
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(p) Notwithstanding any other provision of the Mortgage, including without limitation Section 3 of Part II of the Ninth Supplemental Indenture, or hereof, upon presentation and surrender to the Trustee of any Series GG bond or bonds accompanied by the written request of any institutional holder thereof, the Company will execute, and upon its request the Trustee will authenticate and deliver to the institutional holder or to the office of its custodian, if any, as soon as reasonably practicable after such request, in exchange for said Series GG bond or bonds, an equivalent unpaid principal amount of Series GG bonds in any denomination provided for herein, registered in the name of such institutional holder or in such other name as such institutional holder may specify or as such institutional holder may elect.
(q) Notwithstanding any other provision of the Mortgage, including without limitation Section 3 of Part II of the Ninth Supplemental Indenture, or hereof, upon the presentation and surrender to the Trustee of any Series GG bond or bonds accompanied by a written instrument of transfer in a form reasonably satisfactory to the Company and the Trustee, the Company will execute, and upon its request the Trustee shall authenticate and deliver to the transferee or to the office of its custodian, as soon as reasonably practicable after surrender of such Series GG bond or bonds, an equivalent unpaid principal amount of Series GG bonds in any denomination provided for herein, registered in the name of the transferee or in such other name as may be specified in the instrument of transfer.
(r) Notwithstanding any other provision of the Mortgage, including without limitation Section 3 of Part II of the Ninth Supplemental Indenture, or hereof, the Company will bear all expenses in connection with the preparation, issue, delivery and the above-mentioned exchanges and transfers of Series GG bonds, including, with respect any institutional holder of the Series GG bonds, the cost of transmitting Series GG bonds for the purpose of such exchanges to and from such institutional holder's home office or the office of its custodian, as well as the cost of transmitting Series GG bonds for the purpose of such transfers from any such institutional holder's home office or the office of its custodian and to the transferee.
(s) Notwithstanding any other provision of the Mortgage, including without limitation Section 3 of Part II of the Ninth Supplemental Indenture, or hereof, if any holder of Series GG bonds is an insurance company, its own agreement of indemnity shall be deemed to be satisfactory indemnity and security where required under the Mortgage or any Supplemental Indenture.
(t) The Series GG bonds shall be issued upon and subject to the other provisions and agreements in respect thereof hereinafter in this Thirty-Eighth Supplemental Indenture contained.
Section 3. Form of Series GG Bonds. The registered bonds without coupons of Series GG shall be substantially in the following form:
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	 [FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES GG]
			California Water Service Company 		 First Mortgage 6.98% Bond, Series GG 			 Due November 1, 2023
No..................
California Water Service Company, a California corporation (hereinafter called the "Company"), for value received hereby promises to pay to ...................................................... or registered assigns, the principal sum of ......................... Dollars on November 1, 2023 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest (computed on the basis of a 360 day year of twelve 30 day months), semi-annually on May 1 and November 1 of each year, on said principal sum, in like coin or currency, at the rate per annum specified in the title of this bond, from the May 1 or November 1, as the case may be, next preceding the date hereof to which interest has been paid, or, if the date hereof is a date to which interest has been paid, from the date hereof, or if no interest has been paid on the Series GG bonds, then from ............. [date of authentication of the initial issue of Series GG bonds], until payment of said principal sum has been made or duly provided for. Notwithstanding the foregoing, if the date hereof is after April 15 and before the next following May 1 or is after October 15 and before the next following November 1, this bond shall bear interest from such May 1 or November 1; provided, however, that if the Company shall default in the payment of interest due on such May 1 or November 1, then this bond shall bear interest from the next preceding May 1 or November 1 to which interest has been paid, or, if no interest has been paid on the Series GG bonds, from ............. [date of authentication of the initial issue of Series GG bonds]. Such principal and interest shall be payable at the corporate trust office of Bank of America National Trust and Savings Association, in the City of Los Angeles, State of California. The interest so payable on any May 1 or November 1 will, except as provided in the Indenture as hereinafter defined, be paid to the person in whose name this bond is registered at the close of business on the April 15 prior to such May 1 or the October 15 prior to such November 1 unless such April 15 or October 15 shall not be a business day (as defined in said Indenture), in which event the business day next preceding; and may be paid by check to the order of such person mailed on the payment date to such person's address as the same appears on the books maintained for such purpose by or on behalf of the Company, or, if there then be in effect any home office payment agreement between the Company and any particular institutional holder of this bond specifying a different address for or manner of payment, shall be paid to such institutional holder at such different address and in such different manner.
This bond is one of an authorized issue of bonds of the Company, known generally as its First Mortgage Bonds, all issued and to be issued in one or
				 17 53
more series under and equally secured by an indenture executed by the Company to American Trust Company and Los Angeles-First National Trust & Savings Bank, as trustees, dated April 1, 1928 (hereinafter called the "Original Indenture"), as supplemented, amended and modified by the first eight indentures supplemental thereto and particularly by that certain Supplemental Mortgage of Chattels and Trust Indenture (hereinafter called the "Eighth Supplemental Indenture"), executed by the Company to American Trust Company and Security-First National Bank of Los Angeles (formerly known as Los Angeles-First National Trust & Savings Bank), as trustees, dated November 1, 1945, which Eighth Supplemental Indenture particularly describes the seven preceding supplemental indentures, and as further supplemented by other indentures supplemental thereto creating particular series of bonds, which Original Indenture as so supplemented, amended and modified is herein called the "Indenture." As provided in the Indenture, said bonds may be for various principal sums and are issuable in series which may mature at different times, may bear interest at different rates and may otherwise vary as in the Indenture provided or permitted. This bond is one of the bonds limited to an aggregate principal amount of Twenty Million Dollars ($20,000,000) created by the Indenture and particularly by that certain Supplemental Mortgage of Chattels and Trust Indenture (hereinafter called the "Thirty-Eighth Supplemental Indenture"), executed by the Company to Bank of America National Trust and Savings Association, as trustee, dated as of October 15, 1993, and designated therein as set forth in the title of this bond (herein sometimes referred to as the "Series GG bonds"). Reference is hereby made to the Indenture for a description of the property mortgaged and pledged, the nature and extent of the security, and the rights of the Company, of the trustee under the Indenture (hereinafter referred to as the "Trustee") and of the holders of the bonds in respect thereto.
This bond may not be redeemed prior to November 1, 2003, except as provided in clauses (i), (ii) and (iii) below. On or after November 1, 2003, this bond is subject to redemption at any time, in whole or in part, at the option of the Company, initially at a redemption price equal to 103.490% of the outstanding principal amount thereof and thereafter at a redemption price equal to the principal amount thereof plus a premium equal to the following percentages, respectively, of said principal amount:
		During the Twelve 		Months Beginning 		 November 1 Premium
		 2004 3.141% 		 2005 2.792% 		 2006 2.443% 		 2007 2.094% 		 2008 1.745% 		 2009 1.396% 		 2010 1.047% 		 2011 0.698% 		 2012 0.349% 		 2013 (and each year thereafter) 0.0000%
				 18 54
together with interest accrued thereon to the date fixed for redemption (such redemption price being hereinafter called the "Regular Redemption Price"); provided, however, that Series GG bonds may be redeemed (i) out of cash held in the sinking fund hereinafter mentioned, (ii) through the application of the proceeds of the sale of any complete water system or any substantial part of a water system owned by the Company, including without limiting the generality of the foregoing a sale to a municipality or other public body or agency having the power of eminent domain or the right to purchase or order the sale of such property, or (iii) in connection with a sale pursuant to involuntary liquidation of the Company, and, in case of redemption upon any such event, the applicable redemption price shall be the principal amount of such Series GG bonds so redeemed, together with interest accrued thereon to the redemption date (such redemption price being hereinafter called the "Special Redemption Price").
In each case such redemption shall only be made upon at least thirty days' notice sent by the Company (except where such redemption is made out of cash deposited in the sinking fund hereinafter mentioned) and upon the further conditions and in the manner provided in the Indenture. If this bond is called for redemption and payment therefor is duly provided, as specified in the Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption; provided, however, that if only a part of the principal amount of this bond is called for redemption, interest shall cease to accrue from and after the date fixed for redemption only upon that portion of the principal amount hereof called for redemption, and in case of any such partial redemption of this bond, payment of the redemption price will be made only (a) upon surrender of this bond in exchange for a new bond or bonds of authorized denominations of this series of an aggregate principal amount equal to the unredeemed portion of this bond, (b) upon presentation of this bond for notation hereon of the payment of such portion of the principal amount hereof so called for redemption, or (c) in accordance with the applicable terms of any home office payment agreement between the Company and any institutional holder of this bond.
Said Thirty-Eighth Supplemental Indenture provides a sinking fund applicable to the Series GG bonds, which requires the Company to deposit with the Trustee in cash on or before the end of each year ending October 31, commencing with the year ending October 31, 1994 through the year ending October 31, 2022, the sum of $100,000. Such annual sinking fund payments shall be made, held and applied to the retirement or for the greater security of the outstanding Series GG bonds in the manner more particularly provided in said Thirty-Eighth Supplemental Indenture, including the redemption of outstanding Series GG bonds as therein provided.
To the extent and in the manner permitted by the Indenture, the provisions of the Indenture or any supplemental indenture may be modified by the Company with the consent of the Trustee and the written consent of the holders of 75% in principal amount of all bonds then outstanding under the Indenture; provided, however, (1) that the obligation of the Company to pay the principal of the bonds and the interest thereon, as the same shall from time to time
				 19 55
become due, shall continue unimpaired; (2) that no such modification shall give to any bond or bonds any preference over any other bond or bonds; (3) that no such modification shall authorize the creation of any lien prior or equal to the lien of the Indenture on any of the fixed property of the Company now owned or hereafter acquired and on which the same shall constitute a lien; (4) that no such modification shall reduce the percentage of the principal amount of bonds the consent of which is required to effect a modification of the Indenture or any supplemental indenture; and (5) that if any such modification shall affect one or more series of bonds and shall not affect equally the bonds of all series, then such modification shall also be consented to by the holders of 75% in principal amount of the bonds of each series which will be so affected.
In case an event of default as defined in the Indenture or if certain other contingencies specified therein shall occur, the principal of this bond may become or be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by attorney duly authorized in writing, at the corporate trust office of Bank of America National Trust and Savings Association, in the City of Los Angeles, State of California, upon surrender and cancellation of this bond. Upon any such transfer, a new registered bond or bonds without coupons, of the same series and for the same aggregate unpaid principal amount, will be issued to the transferee in exchange therefor. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner hereof for the purpose of receiving payment hereof or on account hereof (including principal, interest and premium, if any) and for all other purposes and shall not be affected by any notice to the contrary.
The Series GG bonds are issuable in the form of registered bonds without coupons in the denomination of $1,000 and any denominations that are multiples of $1,000.
No recourse shall be had for the payment of the principal of, premium, if any, or the interest on, this bond, or for any claim based hereon or on the Indenture or any indenture supplemental thereto, against any incorporator, or against any stockholder, director or officer, as such, past, present or future, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitution, statute or otherwise, of incorporators, stockholders, directors or officers being released by every holder hereof by the acceptance of this bond and as part of the consideration for the issue hereof, and being likewise released by the terms of the Indenture; provided, however, that nothing herein or in the Indenture contained shall be taken to prevent recourse to and the enforcement of the liability, if any, of any stockholder or subscriber to capital stock of the Company upon or in respect of shares of capital stock not fully paid.
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This bond, with or without others of like form and series, may be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate unpaid principal amount.
This bond shall not become valid or obligatory until Bank of America National Trust and Savings Association, the current Trustee under the Indenture, or a successor Trustee thereunder, shall have signed the form of certificate endorsed hereon.
In Witness Whereof, California Water Service Company has caused this bond to be signed, manually or in facsimile, by its President or a Vice President and its corporate seal (or a facsimile thereof) to be hereto affixed, imprinted, engraved or otherwise reproduced and attested, manually or in facsimile, by its Secretary or an Assistant Secretary.
Dated: ..........................
				 CALIFORNIA WATER SERVICE COMPANY
				 By...................................... 								 President
Attest: ............................ 		 Secretary
[seal]
		 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
			 TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series designated therein, described in the within mentioned Indenture and registered on the registration books of the Trustee.
Dated: ..........................
				 BANK OF AMERICA NATIONAL TRUST AND SAVINGS 				 ASSOCIATION
				 Trustee
				 By....................................... 							Authorized Officer
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				 ARTICLE II.
				 Issue of Bonds
Section 1. Conditions Applicable to Issuance of Series GG Bonds. Bonds of Series GG shall be authenticated, issued and delivered only upon and subject to the terms and conditions specified in Article II of the Original Indenture, as amended by the Eighth Supplemental Indenture, as applicable to bonds after the initial issue of bonds under the Original Indenture.
				 ARTICLE III.
				 Redemption
Section 1. Right to Redeem; Redemption Prices. Series GG bonds may not be redeemed prior to November 1, 2003, except as provided in clauses (i), (ii) and (iii) below. On or after November 1, 2003, the Company may, at its election, evidenced by a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company under its corporate seal to have been duly adopted by the Board of Directors, and delivered to the Trustee, redeem at any time or from time to time (and whether or not on an interest payment date or interest payment dates) all or any part of the bonds of Series GG at the Regular Redemption Price set forth in the form of registered bond without coupons of Series GG hereinabove recited; provided, however, that Series GG bonds may be redeemed (i) out of cash held in the sinking fund hereinafter provided for, or (ii) through the application of the proceeds of the sale of any complete water system or any substantial part of a water system owned by the Company, including without limitation of the generality of the foregoing a sale to a municipality or other public body or agency having the power of eminent domain or the right to purchase or order the sale of such property, or (iii) in connection with a sale pursuant to involuntary liquidation of the Company, and, in case of redemption upon any such event, the applicable redemption price shall be the Special Redemption Price set forth in the form of registered bond without coupons of Series GG hereinabove recited.
Section 2. Notice and Manner of Redemption. Such redemption of Series GG bonds or any of the same shall only be made upon the notice and in the manner and with the effect as provided in Article IV of the Original Indenture, as amended by the Eighth and Ninth Supplemental Indentures, excepting only that notwithstanding anything in said Article IV provided, (1) no notice by publication shall be required and notice of redemption shall be sent by the Company, delivery charges prepaid, by first class mail or by same-day or overnight messenger at least thirty days prior to the redemption date to the respective registered holders of the bonds called for redemption at their last addresses appearing on the books maintained for such purpose by or on behalf of the Company, except no such notice is required to be sent by the Company where such redemption is made out of cash deposited in the sinking fund referred to in Article IV of this Thirty-Eighth Supplemental Indenture; (2) in case the Company shall redeem less than all of the bonds of Series GG, whether
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through the sinking fund or otherwise, the Trustee shall redeem the bonds held by each registered holder pro rata in an amount proportional to the amount of then outstanding Series GG bonds held by such registered holder, and the notice of redemption shall specify the respective portions of the principal amount of each such bond to be redeemed in part and shall also state that payment of the redemption price will be made only (a) upon presentation of said bond for notation thereon of the payment of such portion of the principal amount thereof (b) upon surrender of said bond in exchange for a new bond or bonds of authorized denominations of the same series and of an aggregate principal amount equal to the unredeemed portion of said bond, or (c) in accordance with the applicable terms of any respective home office payment agreement(s) between the Company and any institutional holder(s) of Series GG bonds; and (3) the redemption moneys for any Series GG bonds shall be paid and deposited in lawful money of the United States of America.
				 ARTICLE IV.
				 Sinking Fund
Section 1. Amount and Time of Payment. The Company covenants and agrees that it will establish and maintain by annual cash deposits with the Trustee a sinking fund for the benefit of holders of Series GG bonds and for the purpose of retiring and/or further securing such bonds, all as hereinafter in this Article IV provided. The amount to be deposited annually in such sinking fund (the "mandatory sinking fund payment") shall be, for the period commencing with the year ending October 31, 1994 through the year ending October 31, 2022, the sum of $100,000. The Company shall deposit said respective amounts in cash with the Trustee on or before the end of each year ending October 31, commencing on October 31, 1994.
Section 2. Application of Sinking Fund Cash to Redemption of Bonds. All cash deposited with the Trustee for the sinking fund for Series GG bonds shall be held in a fund known as "Series GG Sinking Fund Cash". Notwithstanding any provisions to the contrary in Article IV of the Original Indenture, as amended by the Eighth Supplemental Indenture and Section 6 of the Ninth Supplemental Indenture, the Company shall instruct the Trustee in each year, after the deposit with the Trustee of the sinking fund payment for such year, to redeem Series GG bonds from the Series GG Sinking Fund Cash in accordance with the provisions of Article III of this Thirty-Eighth Supplemental Indenture. The Company shall fix the date for the redemption of such Series GG bonds to be the November 1 first following the deposit with the Trustee of any such sinking fund payment. However, the Trustee will redeem Series GG bonds only in denominations of $1,000 or multiples thereof. If any registered holder's share of the sinking fund payment is not an even multiple of $1,000, the Trustee shall hold for the account of such registered holder the difference between the amount of such registered holder's share and the highest multiple of $1,000 which is less than such amount. The Trustee shall apply such sum on the next possible sinking fund redemption date to redeem Series GG bonds from such registered holders in authorized multiples of $1,000.
				 23 59
The Company covenants and agrees to take any and all steps necessary to effect the redemption of such Series GG bonds from the Series GG Sinking Fund Cash as provided in this Thirty-Eighth Supplemental Indenture, but if the Company shall fail to do so, the Trustee is hereby authorized and empowered, to take all such steps for and in the name of the Company, including the giving of any notice of redemption. No resolution of the Board of Directors of the Company shall be necessary for such redemption and if the Trustee holds such amount of money in the sinking fund that shall, in and of itself, constitute the election of the Company to redeem the largest amount of bonds which may be thereby redeemed.
Section 3. Limitations on Use of Sinking Fund Cash in Case of Default. Notwithstanding anything hereinbefore provided, the Trustee shall not use cash in said sinking fund to redeem any bonds if the Company shall be in default under the Indenture to the knowledge of the Trustee and, in the event of default, the cash in the sinking fund shall form a part of the trust estate for the equal protection of all bonds as above provided for any part of the trust estate.
Section 4. Sinking Funds for Bonds of Other Series. The Company further covenants and agrees that any bonds of any other series which may be hereafter issued under the Original Indenture or any indenture supplemental thereto while any Series GG bonds are outstanding shall have a sinking fund, commencing not later than eighteen months after the date of authentication and delivery of such bonds of other series, in an annual amount not less than 1/2 of 1% of the maximum aggregate principal amount of all bonds of such other series at any time authenticated and delivered by the Trustee after deducting therefrom the aggregate principal amount of all bonds of such other series theretofore retired otherwise than through the operation of such sinking fund.
				 PART II.
			 Miscellaneous Provisions 		 with Respect to Supplemental Indenture
Section 1. The Trustee. The Trustee hereby accepts the trusts under this Thirty-Eighth Supplemental Indenture and agrees to perform the same on the terms and conditions set forth in the Original Indenture and supplemental indentures, including this Thirty-Eighth Supplemental Indenture. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Thirty-Eighth Supplemental Indenture or the due execution hereof by the Company nor for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.
Section 2. Destruction of Bonds. The Trustee shall forthwith cancel and destroy all bonds transferred, exchanged or redeemed and delivered to the Trustee and the Trustee shall deliver a certificate of such destruction to the Company.
				 24 60
Section 3. Separability of Invalid Provisions. If any one or more of the covenants or agreements provided in this Thirty-Eighth Supplemental Indenture on the part of the Company or the Trustee to be performed should be contrary to any express provision of law, or contrary to the policy of express law, to such an extent as to be unenforceable in any court of competent jurisdiction, then such covenant or covenants, agreement or agreements, shall be null and void, and shall be deemed separable from the remaining covenants and agreements and shall in no wise affect or impair the validity of this Thirty-Eighth Supplemental Indenture.
Section 4. Effect on Successors and Assigns of Parties. Whenever in this Thirty-Eighth Supplemental Indenture either of the parties hereto is named or referred to, the successors and assigns of such party (subject, however, to the provisions of Article IX of the Original Indenture, as amended by the Eighth Supplemental Indenture, as to the successors and assigns of the Company) shall be deemed to be included, and, subject as aforesaid, all the covenants, promises and agreements in this Thirty-Eighth Supplemental Indenture contained, by or on behalf of the Company or by or on behalf of the Trustee, shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not.
Section 5. Immunity of Incorporators, Stockholders, Officers and Directors. No recourse shall be had for the payment of the principal of, premium, if any, or the interest on, any Series GG bonds, or for any claim based on any of the Series GG bonds or on the Original Indenture or any indenture supplemental thereto, against any incorporator, or against any stockholder, director or officer, as such, past, present or future, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability, whether at common law, in equity, by any constitution, statute or otherwise, of incorporators, stockholders, or officers being released by every holder of Series GG bonds by the acceptance thereof and as part of the consideration for the issue thereof; provided, however, that nothing in the Original Indenture or any indenture supplemental thereto or in the Series GG bonds contained shall be taken to prevent recourse to and the enforcement of liability, if any, of any stockholder or subscriber to capital stock of the Company upon or in respect of shares of capital stock not fully paid.
Section 6. Titles Not Part of Supplemental Indenture. The titles of Parts and Articles and headings of Sections are inserted for convenience only and are not a part of this Thirty-Eighth Supplemental Indenture.
Section 7. Counterparts. This Thirty-Eighth Supplemental Indenture may be simultaneously executed in any number of counterparts and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
				 25 61
Section 8. Title to Property; Authority to Mortgage; Prior Liens. The Company covenants and agrees that the statements contained in Section 3.01 of Part II of the Eighth Supplemental Indenture shall also apply to all properties acquired subsequent to the Eighth Supplemental Indenture and not heretofore released from the lien of the Indenture pursuant to the provisions of Article V of Part II of the Eighth Supplemental Indenture.
In Witness Whereof, said California Water Service Company and said Bank of America National Trust and Savings Association have caused these presents to be signed in their respective corporate names by their respective officers thereunto duly authorized and impressed with their respective corporate seals, all as of the day and year first above written.
				 CALIFORNIA WATER SERVICE COMPANY
				 By /s/ DONALD L. HOUCK
					President and Chief Executive 					Officer
[Seal]
				 By /s/ HELEN MARY KASLEY
					Secretary
				 BANK OF AMERICA NATIONAL TRUST AND SAVINGS 				 ASSOCIATION
[Seal]
				 By /s/ JENNIFER HOLDER
				 Senior Trust Officer
				 26 62
State of California ) 			) ss. County of Santa Clara )
On 10/13/93 before me, CHRISTINA M. FREEMAN , a Notary Public in and for the State of California, personally appeared Donald L. Houck and Helen M. Kasley, known to me (or proved to me on the basis of satisfactory evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacities, and that by their signatures on the instrument the entity upon behalf of which the persons acted executed the instrument.
WITNESS my hand and official seal.
[Notarial Seal]
				 /s/ CHRISTINA M. FREEMAN
				 27 63
State of California ) 				 ) ss. City and County of San Francisco )
On 10/26/93 before me, NORMA L. CANTORA , a Notary Public in and for the State of California, personally appeared Jennifer Holder, known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the entity upon behalf of which the person acted executed the instrument.
WITNESS my hand and official seal.
[Notarial Seal]
									 				 /s/ NORMA L. CANTORA
				 28 64
				 SCHEDULE A
The resignations of Wells Fargo Bank, National Association and Security Pacific National Bank as trustees and the appointment of Bank of America National Trust and Savings Association as successor trustee have been recorded in the offices of the Recorders of the following counties and city and county of the State of California on the respective dates and in the respective books of record and/or as the respective document numbers hereinafter set forth as follows:
County or Book and City and Recording Document Page County Date Number (Reel-Image)
Alameda........... August 1, 1983 83-137410 None Butte............. August 1, 1983 83-25375 2851-200 Fresno............ August 2, 1983 83069489 Not Available Glenn............. August 1, 1983 3329 729-170 Kern.............. August 2, 1983 12487 5576-522 Los Angeles....... August 2, 1983 83-887733 None Monterey.......... August 1, 1983 GG 34173 1655-830 City and County of San Francisco....... August 1, 1983 D 376552 D559-205 San Joaquin....... August 10, 1983 83058347 None San Mateo......... August 1, 1983 83080322 None Santa Clara....... August 1, 1983 7766085 H770-413 Solano............ August 1, 1983 32353 Page 61300 Sonoma............ August 1, 1983 83-50597 83-50597 Tulare............ August 1, 1983 35981 4093-763 Yuba.............. August 1, 1983 1056 805-423
				 29 65
				 SCHEDULE B
The First through Thirty-Seventh Supplemental Indentures have been recorded in the offices of the Recorders of the following counties and city and county of the State of California on the respective dates and in the respective books of record and/or as the respective document numbers hereinafter set forth, as follows:
			 FIRST SUPPLEMENTAL INDENTURE
								 Page 						 Vol. of at which 				Date of Official Record 	County Recordation Records Commences
Kings.................. Jan. 7, 1929 40 432 Contra Costa........... Jan. 7, 1929 157 256
			 SECOND SUPPLEMENTAL INDENTURE 								 Page 						 Vol. of at which 				 Date of Official Record 	 County Recordation Records Commences
Kings.................. August 20, 1929 48 442 Butte.................. August 20, 1929 116 389 Glenn.................. August 20, 1929 17 179 Alameda................ August 20, 1929 2173 334 Tulare................. August 20, 1929 337 88 Kern................... August 21, 1929 320 95 Contra Costa........... August 20, 1929 208 198
			 THIRD SUPPLEMENTAL INDENTURE 									Page 						 Vol. of at which 				 Date of Official Record 	 County Recordation Records Commences
Yuba................... February 28, 1930 9 238 City and County of San Francisco............ February 28, 1930 1985 257
			 FOURTH SUPPLEMENTAL INDENTURE 								 Page 						 Vol. of at which 				 Date of Official Record 	 County Recordation Records Commences
San Mateo.............. July 17, 1931 537 1 City and County of San Francisco............ July 20, 1931 2232 284 Santa Clara............ July 17, 1931 576 175
				 30 66
				 FIFTH SUPPLEMENTAL INDENTURE
									Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
City and County of San Francisco.......... March 31, 1932 2359 17 Yuba................. April 6, 1932 12 469 Sonoma............... April 6, 1932 320 39 Alameda.............. April 6, 1932 2808 77 Tulare............... April 6, 1932 466 381 Los Angeles.......... April 6, 1932 11543 85 San Joaquin.......... April 6, 1932 397 375 Santa Clara.......... April 6, 1932 606 464 San Mateo............ April 6, 1932 553 492 Butte................ April 6, 1932 83 489 Kings................ April 6, 1932 87 292 Glenn................ April 6, 1932 43 123 Shasta............... April 6, 1932 74 10 Contra Costa......... April 6, 1932 299 449 Kern................. April 6, 1932 428 473 Solano............... April 6, 1932 89 66
				SIXTH SUPPLEMENTAL INDENTURE 									Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. June 15, 1936 3314 406 Butte................ June 15, 1936 167 1 Contra Costa......... June 15, 1936 418 12 Glenn................ June 15, 1936 82 73 Kern................. June 15, 1936 643 64 Kings................ June 15, 1936 151 241 Los Angeles.......... June 15, 1936 14153 291 City and County of San Francisco.......... June 15, 1936 2972 1 San Joaquin.......... June 15, 1936 542 53 San Mateo............ June 15, 1936 703 1 Santa Clara.......... June 15, 1936 777 137 Shasta............... June 15, 1936 108 134 Solano............... June 15, 1936 161 1 Sonoma............... June 15, 1936 412 160 Tulare............... June 15, 1936 682 1 Yuba................. June 15, 1936 35 25
				 31 67
				SEVENTH SUPPLEMENTAL INDENTURE
									Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Los Angeles.......... May 1, 1939 16572 206 City and County of San Francisco.......... May 2, 1939 3450 93 San Mateo............ May 2, 1939 840 94 Sonoma............... May 2, 1939 477 108 Kern................. May 2, 1939 869 12
				EIGHTH SUPPLEMENTAL INDENTURE 									Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. November 3, 1945 4780 134 Butte................ November 2, 1945 380 1 Contra Costa......... November 3, 1945 874 1 Fresno............... February 21, 1962 4681 226 Glenn................ November 2, 1945 191 1 Kern................. November 2, 1945 1292 21 Kings................ November 1, 1945 342 1 Los Angeles.......... November 2, 1945 22396 251 Monterey............. February 21, 1962 23 (Reel) 1 City and County of San Francisco.......... November 2, 1945 4346 103 San Joaquin.......... November 3, 1945 960 21 San Mateo............ November 3, 1945 1231 1 Santa Clara.......... November 1, 1945 1267 583 Solano............... November 3, 1945 344 6 Sonoma............... November 3, 1945 665 21 Tulare............... November 3, 1945 1141 382 Yuba................. November 3, 1945 94 23
				 32 68
				NINTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. August 31, 1951 6525 237 Butte................ August 30, 1951 603 1 Contra Costa......... August 30, 1951 1814 508 Fresno............... February 21, 1962 4681 437 Glenn................ August 30, 1951 266 63 Kern................. August 29, 1951 1840 373 Kings................ August 30, 1951 502 228 Los Angeles.......... August 29, 1951 37102 345 Monterey............. February 21, 1962 23 (Reel) 207 City and County of San Francisco.......... August 30, 1951 5773 355 San Joaquin.......... August 30, 1951 1372 123 San Mateo............ August 30, 1951 2150 298 Santa Clara.......... August 30, 1951 2275 295 Solano............... August 31, 1951 592 136 Sonoma............... August 31, 1951 1072 420 Tulare............... August 30, 1951 1539 528 Yuba................. August 31, 1951 155 177
				TENTH SUPPLEMENTAL INDENTURE 									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. July 10, 1953 7078 451 Butte................ July 9, 1953 679 45 Contra Costa......... July 9, 1953 2157 453 Fresno............... February 21, 1962 4681 540 Glenn................ July 9, 1953 297 139 Kern................. July 8, 1953 2102 215 Kings................ July 9, 1953 561 249 Los Angeles.......... July 8, 1953 42134 371 Monterey............. February 21, 1962 23 (Reel) 314 City and County of San Francisco.......... July 9, 1953 6190 21 San Joaquin.......... July 9, 1953 1540 523 San Mateo............ July 10, 1953 2443 248 Santa Clara.......... July 9, 1953 2680 50 Solano............... July 9, 1953 677 4 Sonoma............... July 10, 1953 1218 348 Tulare............... July 9, 1953 1686 314 Yuba................. July 10, 1953 181 1
				 33 69
			 ELEVENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. August 20, 1954 7404 181 Butte................ August 20, 1954 732 496 Contra Costa......... August 20, 1954 2368 164 Fresno............... February 21, 1962 4681 604 Glenn................ August 20, 1954 314 369 Kern................. August 20, 1954 2278 74 Kings................ August 20, 1954 594 449 Los Angeles.......... August 19, 1954 45365 64 Monterey............. February 21, 1962 23 (Reel) 377 City and County of San Francisco.......... August 20, 1954 6435 421 San Joaquin.......... August 20, 1954 1662 316 San Mateo............ August 19, 1954 2636 330 Santa Clara.......... August 20, 1954 2942 331 Solano............... August 19, 1954 728 10 Sonoma............... August 20, 1954 1290 234 Tulare............... August 20, 1954 1772 388 Yuba................. August 20, 1954 195 490
				TWELFTH SUPPLEMENTAL INDENTURE 									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. October 7, 1955 7806 501 Butte................ October 7, 1955 794 9 Contra Costa......... October 7, 1955 2625 417 Fresno............... February 21, 1962 4681 665 Glenn................ October 7, 1955 331 350 Kern................. October 6, 1955 2498 171 Kings................ October 7, 1955 628 1 Los Angeles.......... October 6, 1955 49158 316 Monterey............. February 21, 1962 23 (Reel) 439 City and County of San Francisco.......... October 7, 1955 6711 525 San Joaquin.......... October 7, 1955 1797 300 San Mateo............ October 7, 1955 2890 480 Santa Clara.......... October 7, 1955 3299 406 Solano............... October 7, 1955 792 422 Sonoma............... October 7, 1955 1384 2 Tulare............... October 7, 1955 1864 548 Yuba................. October 7, 1955 213 593
				 34 70
			 THIRTEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. December 7, 1956 8226 15 Butte................ December 7, 1956 859 117 Contra Costa......... December 7, 1956 2894 20 Fresno............... February 21, 1962 4681 729 Glenn................ December 7, 1956 348 217 Kern................. December 6, 1956 2699 390 Kings................ December 7, 1956 666 316 Los Angeles.......... December 6, 1956 53054 61 Monterey............. February 21, 1962 23 (Reel) 503 City and County of San Francisco.......... December 10, 1956 6970 41 San Joaquin.......... December 7, 1956 1925 1 San Mateo............ December 7, 1956 3140 258 Santa Clara.......... December 7, 1956 3680 1 Solano............... December 7, 1956 860 189 Sonoma............... December 7, 1956 1489 28 Tulare............... December 7, 1956 1961 551 Yuba................. December 7, 1956 233 65
			 FOURTEENTH SUPPLEMENTAL INDENTURE 									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. March 20, 1964 1155 (Reel) (Image) 2 Butte................ March 20, 1964 1303 8 Contra Costa......... March 20, 1964 4578 360 Fresno............... March 20, 1964 4980 337 Glenn................ March 20, 1964 463 1 Kern................. March 19, 1964 3706 1 Los Angeles.......... March 19, 1964 D2401 6 Monterey............. March 20, 1964 299 (Reel) 230 City and County of San Francisco............ March 20, 1964 A734 966 San Joaquin.......... March 20, 1964 2801 126 San Mateo............ March 19, 1964 4670 563 Santa Clara.......... March 20, 1964 6432 567 Solano............... March 20, 1964 1259 331 Sonoma............... March 19, 1964 2030 757 Tulare............... March 20, 1964 2491 437 Yuba................. March 20, 1964 389 535
				 35 71
			 FIFTEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. November 4, 1965 1635 610 Butte................ November 4, 1965 1398 67 Contra Costa......... November 4, 1965 4987 469 Fresno............... November 4. 1965 5236 699 Glenn................ November 4, 1965 483 194 Kern................. November 3, 1965 3889 476 Los Angeles.......... November 3, 1965 D3104 7 Monterey............. November 4, 1965 432 526 City and County of San Francisco.......... November 4, 1965 A983 431 San Joaquin.......... November 4, 1965 2996 13 San Mateo............ November 4, 1965 5056 588 Santa Clara.......... November 4, 1965 7166 234 Solano............... November 3, 1965 1366 547 Sonoma............... November 3, 1965 2167 261 Tulare............... November 4, 1965 2619 12 Yuba................. November 4, 1965 422 562
			 SIXTEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. December 2, 1966 1881 788 Butte................ December 2, 1966 1452 13 Contra Costa......... December 2, 1966 5256 298 Fresno............... December 2, 1966 5383 432 Glenn................ December 2, 1966 495 555 Kern................. December 1, 1966 3999 845 Los Angeles.......... December 1, 1966 D3496 236 Monterey............. December 2, 1966 485 472 City and County of San Francisco.......... December 2, 1966 B101 10 San Joaquin.......... December 2, 1966 3090 511 San Mateo............ December 2, 1966 5244 411 Santa Clara.......... December 2, 1966 7579 440 Solano............... December 1, 1966 1429 482 Sonoma............... December 1, 1966 2243 434 Tulare............... December 2, 1966 2686 249 Yuba................. December 2, 1966 443 434
				 36 72
			 SEVENTEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. April 2, 1968 2154 273 Butte................ April 2, 1968 1511 632 Contra Costa......... April 2, 1968 5593 177 Fresno............... April 3, 1968 5554 654 Glenn................ April 2, 1968 507 326 Kern................. April 3, 1968 4147 264 Los Angeles.......... April 2, 1968 D3959 10 Monterey............. April 2, 1968 551 580 City and County of San Francisco.......... April 2, 1968 B230 362 San Joaquin.......... April 2, 1968 3199 132 San Mateo............ April 2, 1968 5453 1 Santa Clara.......... April 2, 1968 8076 99 Solano............... April 1, 1968 1501 35 Sonoma............... April 3, 1968 2323 446 Tulare............... April 3, 1968 2773 415 Yuba................. April 2, 1968 465 122
			 EIGHTEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. April 3, 1970 2592 708 Butte................ April 6, 1970 1608 505 Contra Costa......... April 3, 1970 6099 58 Fresno............... April 3, 1970 5775 371 Glenn................ April 6, 1970 524 168 Kern................. April 3, 1970 4384 72 Los Angeles.......... April 6, 1970 D4677 518 Monterey............. April 6, 1970 645 921 City and County of San Francisco.......... April 6, 1970 B414 258 San Joaquin.......... April 3, 1970 3381 569 San Mateo............ April 3, 1970 5766 1 Santa Clara.......... April 3, 1970 8878 585 Solano............... April 3, 1970 1618 477 Sonoma............... April 3, 1970 2453 531 Tulare............... April 3, 1970 2889 894 Yuba................. April 6, 1970 497 84
				 37 73
			 NINETEENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. June 10, 1970 2632 835 Butte................ June 11, 1970 1618 2 Contra Costa......... June 10, 1970 6146 1 Fresno............... June 10, 1970 5793 233 Glenn................ June 11, 1970 526 170 Kern................. June 9, 1970 4405 724 Los Angeles.......... June 10, 1970 D4736 731 Monterey............. June 10, 1970 653 890 City and County of San Francisco...... June 11, 1970 B430 928 San Joaquin.......... June 10, 1970 3402 124 San Mateo............ June 10, 1970 5792 57 Santa Clara.......... June 11, 1970 8949 586 Solano............... June 10, 1970 1629 158 Sonoma............... June 10, 1970 2465 923 Tulare............... June 10, 1970 2898 231 Yuba................. June 11, 1970 500 77
			 TWENTIETH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. April 2, 1971 2820 92 Butte................ April 2, 1971 1667 102 Contra Costa......... April 2, 1971 6351 138 Fresno............... April 2, 1971 5880 820 Glenn................ April 2, 1971 533 530 Kern................. April 1, 1971 4509 30 Los Angeles.......... April 1, 1971 D5014 368 Monterey............. April 2, 1971 695 719 City and County of San Francisco...... April 5, 1971 B507 812 San Joaquin.......... April 5, 1971 3509 305 San Mateo............ April 2, 1971 5919 363 Santa Clara.......... April 2, 1971 9278 182 Solano............... April 5, 1971 1677 384 Sonoma............... April 2, 1971 2524 671 Tulare............... April 2, 1971 2959 373 Yuba................. April 2, 1971 513 81
				 38 74
			 TWENTY-FIRST SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. December 14, 1972 3298 449 Butte................ December 14, 1972 1805 96 Contra Costa......... December 14, 1972 6821 129 Fresno............... December 14, 1972 6104 2 Glenn................ December 14, 1972 554 371 Kern................. December 15, 1972 4757 356 Los Angeles.......... December 14, 1972 D5698 815 Monterey............. December 14, 1972 815 838 City and County of San Francisco...... December 14, 1972 B708 675 San Joaquin.......... December 14, 1972 3718 161 San Mateo............ December 14, 1972 6289 367 Santa Clara.......... December 14, 1972 O154 435 Solano............... December 15, 1972 1795 147 Sonoma............... December 14, 1972 2719 547 Tulare............... December 14, 1972 3075 674 Yuba................. December 14, 1972 546 360
			 TWENTY-SECOND SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. December 27, 1972 3306 930 Butte................ December 27, 1972 1807 385 Contra Costa......... December 27, 1972 6829 150 Fresno............... December 27, 1972 6108 355 Glenn................ December 27, 1972 555 69 Kern................. December 29, 1972 4762 140 Los Angeles.......... December 27, 1972 D5710 690 Monterey............. December 27, 1972 818 40 City and County of San Francisco...... December 27, 1972 B712 707 San Joaquin.......... December 27, 1972 3721 317 San Mateo............ December 27, 1972 6296 114 Santa Clara.......... December 27, 1972 O171 29 Solano............... December 29, 1972 1797 530 Sonoma............... December 27, 1972 2722 782 Tulare............... December 27, 1972 3078 118 Yuba................. December 27, 1972 547 158
				 39 75
			 TWENTY-THIRD SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. December 27, 1972 3307 1 Butte................ December 27, 1972 1807 433 Contra Costa......... December 27, 1972 6829 197 Fresno............... December 27, 1972 6108 307 Glenn................ December 27, 1972 555 116 Kern................. December 29, 1972 4762 187 Los Angeles.......... December 27, 1972 D5710 737 Monterey............. December 27, 1972 818 87 City and County of San Francisco.......... December 27, 1972 B712 733 San Joaquin.......... December 27, 1972 3721 269 San Mateo............ December 27, 1972 6296 161 Santa Clara.......... December 27, 1972 O171 76 Solano............... December 29, 1972 1797 577 Sonoma............... December 27, 1972 2722 830 Tulare............... December 27, 1972 3078 165 Yuba................. December 27, 1972 547 205
			 TWENTY-FOURTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. March 22, 1974 3635 156 Butte................ March 22, 1974 1896 665 Contra Costa......... March 22, 1974 7183 54 Fresno............... March 22, 1974 6279 513 Glenn................ March 22, 1974 570 163 Kern................. March 22, 1974 4832 519 Los Angeles.......... March 22, 1974 D6209 133 Monterey............. March 22, 1974 902 1 City and County of San Francisco.......... March 22, 1974 B866 907 San Joaquin.......... March 22, 1974 3856 1 San Mateo............ March 22, 1974 6574 611 Santa Clara.......... March 22, 1974 815 125 Solano............... March 22, 1974 1974 11482 Sonoma............... March 22, 1974 2847 542 Tulare............... March 22, 1974 3166 315 Yuba................. March 22, 1974 571 423
				 40 76
			 TWENTY-FIFTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. June 20, 1975 4007 676 Butte................ June 20, 1975 1995 455 Contra Costa......... June 20, 1975 7543 54 Fresno............... June 20, 1975 6447 21 Glenn................ June 20, 1975 587 128 Kern................. June 20, 1975 4901 154 Los Angeles.......... June 20, 1975 D6698 184 Monterey............. June 20, 1975 985 335 City and County of San Francisco.......... June 20, 1975 C30 18 San Joaquin.......... June 20, 1975 3996 258 San Mateo............ June 20, 1975 6872 1 Santa Clara.......... June 20, 1975 B474 219 Solano............... June 20, 1975 1975 25377 Sonoma............... June 20, 1975 2970 761 Tulare............... June 20, 1975 3249 11 Yuba................. June 20, 1975 595 695
			 TWENTY-SIXTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. June 10, 1976 4397 342 Butte................ June 10, 1976 2077 441 Contra Costa......... June 10, 1976 7896 746 Fresno............... June 11, 1976 6608 364 Glenn................ June 10, 1976 600 137 Kern................. June 11, 1976 4960 1166 Los Angeles.......... June 10, 1976 10257 734 Monterey............. June 10, 1976 1060 798 City and County of San Francisco.......... June 10, 1976 C184 1 San Joaquin.......... June 10, 1976 4136 42 San Mateo............ June 10, 1976 7151 667 Santa Clara.......... June 10, 1976 C073 688 Solano............... June 10, 1976 1976 31463 Sonoma............... June 10, 1976 3089 913 Tulare............... June 10, 1976 3326 626 Yuba................. June 10, 1976 616 512
				 41 77
			 TWENTY-SEVENTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. March 24, 1978 5312 57 Butte................ March 24, 1978 2268 279 Fresno............... March 27, 1978 6997 25 Glenn................ March 24, 1978 626 594 Kern................. March 24, 1978 5098 1124 Los Angeles.......... March 24, 1978 78-310554 Monterey............. March 24, 1978 1227 1030 City and County of San Francisco...... March 24, 1978 C538 664 San Joaquin.......... March 27, 1978 4377 286 San Mateo............ March 24, 1978 7728 715 Santa Clara.......... March 24, 1978 D549 102 Solano............... March 24, 1978 21803 73 Sonoma............... March 24, 1978 3371 634 Tulare............... March 27, 1978 3315 618 Yuba................. March 24, 1978 662 589
			 TWENTY-EIGHTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. August 28, 1978 5551 62 Butte................ August 28, 1978 2318 170 Fresno............... August 28, 1978 7107 2 Glenn................ August 28, 1978 633 666 Kern................. August 28, 1978 5135 674 Los Angeles.......... August 28, 1978 78-951209 Monterey............. August 28, 1978 1270 1030 City and County of San Francisco...... August 28, 1978 C631 740 San Joaquin.......... August 28, 1978 4442 141 San Mateo............ August 28, 1978 7774 1709 Santa Clara.......... August 28, 1978 D914 715 Solano............... August 28, 1978 -- 71420 Sonoma............... August 28, 1978 3445 337 Tulare............... August 28, 1978 3566 14 Yuba................. August 28, 1978 675 331
				 42 78
			 TWENTY-NINTH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. March 28, 1980 80-055698 Butte................ March 28, 1980 2500 503 Fresno............... March 31, 1980 7494 230 Glenn................ March 31, 1980 663 509 Kern................. March 28, 1980 5275 818 Los Angeles.......... March 31, 1980 80-318971 Monterey............. March 31, 1980 1399 636 City and County of San Francisco...... March 28, 1980 C970 327 San Joaquin.......... March 31, 1980 80020795 San Mateo............ March 28, 1980 7948 1952 Santa Clara.......... March 28, 1980 366 Solano............... March 28, 1980 23159 Sonoma............... March 28, 1980 80-18782 Tulare............... March 31, 1980 3753 500 Yuba................. March 28, 1980 722 625
			 THIRTIETH SUPPLEMENTAL INDENTURE
									 Page 	 County or Vol. of at which 	 City and Date of Official Record 	 County Recordation Records Commences
Alameda.............. January 2, 1981 81-000002 None Butte................ January 2, 1981 81-113 2583-250 Fresno............... January 2, 1981 401 7651-362 Glenn................ January 2, 1981 0023 678-226 Kern................. January 5, 1981 000286 5342-1512 Los Angeles.......... January 2, 1981 81-2293 None Monterey............. January 2, 1981 G00066 1456-551 City and County of San Francisco...... December 31, 1980 D044298 D127-551 San Joaquin.......... January 2, 1981 81000191 None San Mateo............ January 2, 1981 0507AS None Santa Clara.......... January 2, 1981 6941984 -269 Solano............... January 2, 1981 60 Pg 90-156 Sonoma............... January 2, 1981 81-000131 None Tulare............... January 2, 1981 189 3828-412 Yuba................. January 2, 1981 7644 743-99
				 43 79
			 THIRTY-FIRST SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ May 4, 1982 82-064230 None Butte.................. May 4, 1982 82-12318 2715-529 Fresno................. May 3, 1982 37212 7901-572 Glenn.................. May 4, 1982 1908 704-299 Kern................... May 3, 1982 40614 5456-1478 Los Angeles............ May 3, 1982 82-445736 None Monterey............... May 3, 1982 G17137 1549-234 City and County of San Francisco........ May 3, 1982 D198127 D392-276 San Joaquin............ May 4, 1982 82022803 None San Mateo.............. May 3, 1982 82035410 None Santa Clara............ May 3, 1982 7353398 None Solano................. May 3, 1982 15522 Page 26792 Sonoma................. May 3, 1982 82-23083 None Tulare................. May 3, 1982 19242 3961-163 Yuba................... May 3, 1982 10984 775-263
			 THIRTY-SECOND SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ October 13, 1983 83-191597 None Butte.................. October 13, 1983 83-34081 None Fresno................. October 13, 1983 83095135 None Glenn.................. October 13, 1983 4435 None Kern................... October 13, 1983 041161 5597-658 Los Angeles............ October 13, 1983 83-1208172 None Monterey............... October 13, 1983 G46236 1674-1194 City and County of San Francisco........ October 13, 1983 D408975 None San Joaquin............ October 13, 1983 83074718 None San Mateo.............. October 13, 1983 83112077 None Santa Clara............ October 13, 1983 7850561 H980-717 Solano................. October 13, 1983 45171 1983-85369 Sonoma................. October 13, 1983 83-69362 None Tulare................. October 13, 1983 51515 4120-726 Ventura................ October 13, 1983 117059 1983-117059 Ventura (re-recorded).. November 15,1983 130202 1983-130202 Yuba................... October 13, 1983 3764 810-614
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			 THIRTY-THIRD SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ September 13, 1988 88-232083 None Butte.................. September 13, 1988 88-031123 None Fresno................. September 13, 1988 88101543 None Glenn.................. September 13, 1988 88-4023 None Kern................... September 13, 1988 31355 6162-1754 Los Angeles............ September 13, 1988 88-1464893 None Monterey............... September 13, 1988 47561 2273-660 City and County of San Francisco........ September 13, 1988 E243818 None San Joaquin............ September 13, 1988 88077190 None San Mateo.............. September 13, 1988 88120443 None Santa Clara............ September 13, 1988 9833944 None Solano................. September 13, 1988 54422 1988-117737 Sonoma................. September 13, 1988 88-77182 88-77182 Tulare................. September 13, 1988 58120 4745-662 Ventura................ September 13, 1988 88-133327 None Yuba................... September 13, 1988 2818 947-287
			 THIRTY-FOURTH SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ December 20, 1990 90-332019 None Butte.................. December 20, 1990 90-054231 None Fresno................. December 20, 1990 90155101 None Glenn.................. December 20, 1990 90-6395 None Kern................... December 20, 1990 85807 6468-709 Los Angeles............ December 20, 1990 90-2094360 None Monterey............... December 20, 1990 73725 2589-678 City and County of San Francisco........ December 20, 1990 E836831 -480 San Joaquin............ December 20, 1990 90122496 None San Mateo.............. December 20, 1990 90165083 None Santa Clara............ December 21, 1990 10758142 None Solano................. December 20, 1990 99015 None Sonoma................. December 20, 1990 90-122784 None Tulare................. December 23, 1990 83069 None Ventura................ December 20, 1990 90-187399 None Yuba................... December 20, 1990 90-14553 None
				 45 81
			 THIRTY-FIFTH SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ November 3, 1992 92-358477 None Butte.................. November 3, 1992 92-050443 None Fresno................. November 3, 1992 92167544 None Glenn.................. November 3, 1992 92-5920 None Kern................... November 3, 1992 167635 6757-1488 Los Angeles............ November 3, 1992 92-2022769 None Monterey............... November 3, 1992 78604 2867-956 City and County of San Francisco........ November 3, 1992 -0581 San Joaquin............ November 2, 1992 92127961 None San Mateo.............. November 3, 1992 92180648 None Santa Clara............ November 3, 1992 11617179 None Solano................. November 3, 1992 101527 None Sonoma................. November 3, 1992 1992-137370 None Tulare................. November 3, 1992 92-081425 None Ventura................ November 3, 1992 92-198950 None Yuba................... November 3, 1992 92-13796 None
			 THIRTY-SIXTH SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ June 9, 1993 93-203153 None Butte.................. June 9, 1993 93-023408 None Fresno................. June 9, 1993 93086809 None Glenn.................. June 10, 1993 93-2925 None Kern................... June 9, 1993 82236 6859-1043 Los Angeles............ June 9, 1993 93-1098735 None Monterey............... June 9, 1993 38484 None City and County of San Francisco........ June 9, 1993 -0727 San Joaquin............ June 9, 1993 93067318 None San Mateo.............. June 9, 1993 93094357 None Santa Clara............ June 9, 1993 11944269 None Solano................. June 9, 1993 93-51895 None Sonoma................. June 9, 1993 93-71358 None Tulare................. June 9, 1993 93-040396 None Ventura................ June 9, 1993 93-104242 None Yuba................... June 9, 1993 93-06640 None
				 46 82
			 THIRTY-SEVENTH SUPPLEMENTAL INDENTURE
	 County or 	 City and Recording Document Book and Page 	 County Date Number (Reel-Image)
Alameda................ September 28, 1993 93342967 None Butte.................. September 28, 1993 93-041800 None Fresno................. September 28, 1993 93148269 None Glenn.................. September 28, 1993 93-5140 None Kern................... September 28, 1993 140436 6915-188 Los Angeles............ September 28, 1993 93-1891500 None Monterey............... September 28, 1993 66464 None City and County of San Francisco........ September 28, 1993 -511 San Joaquin............ September 28, 1993 93111959 None San Mateo.............. September 28, 1993 93164391 None Santa Clara............ September 28, 1993 12128051 None Solano................. September 28, 1993 93-88880 1993 Sonoma................. September 28, 1993 93-121864 None Tulare................. September 28, 1993 93-069108A None Ventura................ September 28, 1993 93-181168 None Yuba................... September 28, 1993 93-11284 None
	 				 47 83
				 SCHEDULE C
				 None
				 48 84
				 SCHEDULE D
				 None
				 49 85
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS
BUSINESS
California Water Service Company is a public utility supplying water service through 20 separate water systems to 362,900 customers living in 38 communities in California. These systems, or districts, are located throughout the state as shown in the tabulation of page 11. [Note to EDGAR 10K user: the tabulation "Service Areas and Customers" is on page 91 of this filing.] The Company's rates and operations are regulated by the California Public Utilities Commission (Commission) with the rates for each district determined separately. A detailed discussion of Regulation and Rates begins on page 6 of this report. [Note to EDGAR 10K user: the discussion of "Regulation and Rates" is on page 92 of this filing.] The six-year drought in California which required water rationing in a number of the Company's districts was declared officially ended after near- record precipitation in the first three months of 1993. A detailed discussion of Water Supply is on page 4 of this report. [Note to EDGAR 10K user: the discussion of "Water Supply" is on page 93 of this filing.]
RESULTS OF OPERATIONS
Earnings and Dividends
The Company's earnings per share for 1993 were $2.70, compared with $2.18 in 1992 and $2.42 in 1991. Net income was $15,501,000 in 1993 compared with $12,529,000 in 1992 and $13,928,000 in 1991. Earnings and revenue in 1991 and 1992 were impacted by mandatory water rationing in some Company districts and water conservation in all districts. In January 1993, the Board of Directors increased the dividend rate for the twenty-sixth consecutive year. The annual rate paid in 1993 was $1.92 per share, an increase of 3.2% compared with the 1992 dividend of $1.86 per share, which represented an increase of 3.3% over the 1991 dividend of $1.80 per share. The dividend payout ratio was 71% in 1993 compared with 85% in 1992 and 74% in 1991. These increases were based on projections that the higher dividend could be sustained while still providing the Company with adequate financial flexibility.
Operating Revenue
Operating revenue was a record $151.7 million in 1993, compared with $139.8 million in 1992 and $127.2 million in 1991. The increase was $11.9 million, or 9%, in 1993. Step and general rate increases accounted for $2.7 million of added revenue. Offset rate adjustments, primarily for purchased water and pump tax cost increases, added $7.3 million. Average water consumption per customer increased 3%, adding $2.3 million to revenue. However, rationing loss recoveries declined $1.2 million from 1992 due to the ending of rationing. Sales to 2,200 new customers accounted for $0.8 million in additional revenue. In 1992, operating revenue increased $12.6 million from 1991. Step and general rate increases accounted for $3.4 million of added revenue. Offset rate adjustments, primarily for purchased water and pump tax cost
				 14 88
increases, added $7.0 million. Average water consumption per customer increased 6%, adding $3.9 million to revenue. The discontinuance of mandatory rationing in four districts in April 1992 helped account for higher water consumption. However, this also resulted in lower rationing loss recoveries of $4.0 million compared with $6.9 million in 1991. Sales to 3,100 new customers accounted for $1.2 million in additional revenue. In 1991, an October decision of the Commission authorized the Company to recover a portion of revenue lost through water rationing and conservation. In December, after the Commission approved district water management plans, $6,951,000 of revenue lost since August 8, 1990, was recorded as revenue. This included the transfer of $3,195,000 in penalty charges collected from customers who had exceeded their monthly allotments, while the remaining $3,756,000 was accrued as unbilled revenue. Surcharges on customer water bills were authorized by the Commission beginning in 1992, to allow recovery of this accrued unbilled revenue in addition to future revenue losses. Water rationing and conservation in the fifth drought year lowered average water consumption per customer by 14% causing an $11.9 million reduction in revenue. Additional revenue from drought rate relief in 1991 was $5.6 million. General and step rate increases added $4.1 million to 1991 revenue. Sales to 4,300 new customers accounted for $1.3 million in additional revenue. [Appearing within the text of Management's Discussion and Anaylsis of Financial Condition and Results of Operations is a bar chart titled "OPERATING REVENUE (Millions of Dollars)". The chart shows total revenue for the five year period 1989 through 1993. The revenue for those years were: $117.5, $124.4, $127.2, $139.8 and $151.7, respectively.]
Operating and Interest Expenses
Operating expenses in 1993 increased $7.8 million compared with increases of $13.2 million in 1992 and $1.8 million in 1991. Purchased water expense continued to be the largest component of operating expense at $38.5 million, an increase of $5.4 million. This was attributable to a 19% increase in water purchases to 48 billion gallons and to wholesale water suppliers' rate increases. Total water production, including well production and surface supplies was up 3% from 1992 to 95 billion gallons. Total cost of water production, including purchased water, purchased power and pump taxes, was $52.9 million in 1993, $50.2 million in 1992, and $38.8 million in 1991. Commission regulatory procedures allow offset rate adjustments for changes in these costs through use of balancing accounts. However, there was a delay in recovery of some cost increases as discussed under the caption Regulation and Rates on page 6. Employee payroll and benefits charged to operations and maintenance expense was $26.2 million in 1993 compared with $24.8 million in 1992 and $23.5 million in 1991. Bond interest expense in 1993 increased $1.5 million due to the sale of $20 million new bonds in November 1992 and the sale of additional new bonds in 1993 as discussed under the caption Liquidity and Capital Resources. However, this was partially offset by a $336,000 reduction in interest on short-term debt due to reduced borrowings. Bond interest coverage before income taxes was 3.2 in 1993, 2.9 in 1992 and 3.2 in 1991.
				 15 89
New Accounting Standards
The Financial Accounting Standards Board has issued three new statements which affect the financial statements in 1992 or 1993. These are Statement No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions", Statement No. 107 "Disclosures About Fair Value of Financial Instruments", and Statement No. 109 "Accounting for Income Taxes". The effect of these Statements is discussed in Notes to Financial Statements: Note 5--Income Taxes; Note 6--Employee Benefit Plans and Note 7--Fair Value of Financial Instruments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is primarily provided by cash generated from operations and the utilization of a short-term line of credit of $30 million as described in Note 3 to the financial statements. The credit line was temporarily increased to $40 million during the bond refinancing periods in May and November to cover short-term requirements between the calling of bonds and the issuance of new bonds. A major refinancing program was completed in 1993. Eight series of bonds in the principal amount of $49,593,000 and bearing coupons ranging from 8.6% to 12-7/8% were called prior to maturity with a portion of the proceeds from the sale of three $20 million dollar bond issues. The Series EE 7.9% first mortgage bonds were issued in June 1993, the Series FF 6.95% bonds were issued in October 1993 and the Series GG 6.98% bonds were issued in November 1993. Interest savings from the refunding will be approximately $1.9 million annually. Standard & Poor's and Moody's maintained their bond ratings of AA- and Aa3 respectively on the new Series GG bond issue. Capital requirements consist primarily of new construction expenditures for replacing and expanding the Company's utility plant facilities. They also include refunds of advances for construction and retirement of bonds. During 1993, utility plant expenditures totaled $28.8 million including $21.5 million covered by Company funding and $7.3 million being recovered from developers through refundable advances and contributions in aid of construction. Company funding was through cash generated from operations, the use of short-term line of credit and a portion of the proceeds from the sale of new bonds. The 1994 Company construction program has been authorized for $21.6 million. The funds for this program are expected to be provided by cash from operations and a new issue of common stock. Additionally, new subdivision construction will be financed by developers' refundable advances and contributions. [Appearing within the text of Management's Discussion and Anaylsis of Financial Condition and Results of Operations is a bar chart titled "GROSS ADDITIONS TO UTILITY PLANT (Millions of Dollars). The chart shows gross additions to utility plant for the years 1989 through 1993. The additions were $27.3, $26.9, $34.5, $35.2 and $28.8, respectively.]
Capital Structure
The Company's total capitalization at December 31, 1993, was $257.1 million. Capital ratios were: common equity 48.2% preferred stock, 1.4%; and long-term debt, 50.4%. The rate of return on year-end common equity was 12.4% compared with 10.4% in 1992 and 11.7% in 1991.
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SERVICE AREAS AND CUSTOMERS
SAN FRANCISCO BAY AREA
Mid-Peninsula (San Mateo and San Carlos) 35,200 South San Francisco (including Colma and Broadmoor) 15,300 Bear Gulch (including Menlo Park, Atherton, Woodside and Portola Valley) 17,100 Los Altos (including Los Altos and portions Cupertino, Los Altos Hills, Mountain View and Sunnyvale) 17,700 Livermore 14,700 								 ------- 								 100,000
SACRAMENTO VALLEY
Chico (including Hamilton City) 20,100 Oroville 3,500 Marysville 3,800 Dixon 2,700 Willows 2,200 								 ------ 								 32,300
SALINAS VALLEY
Salinas 22,600 King City 1,800 								 ------ 								 24,400
SAN JOAQUIN VALLEY
Bakersfield 54,300 Stockton 40,700 Visalia 25,500 Selma 4,600 								 ------- 								 125,100
LOS ANGELES AREA
East Los Angeles (including portions of City of Commerce and Montebello) 26,400 Hermosa Beach and Redondo Beach (including portion of Torrance) 24,700 Palos Verdes (including Palos Verdes Estates,Rancho Palos Verdes, Rolling Hills Estates and Rolling Hills) 23,400 Westlake (portion of Thousand Oaks) 6,600 								 ------- 								 81,100 								 ------- 								 362,900 								 =======
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REGULATION AND RATES
The California Public Utilities Commission requires that water rates for each Company operating district be determined independently. Each year the Company files general rate increase applications for approximately one- third of its operating districts. According to its rate case processing procedures for water utilities, the Commission attempts to issue decisions within eight month of acceptance. Offset rate adjustments are also allowed as required for changes in purchased water, power costs and pump taxes. During 1993, general rate increase applications were filed with the Commission requesting rate relief of $2,184,800 in three Company districts based upon a rate of return on common equity of 12%. However, in recent proceedings, the Commission staff has been recommending a rate of return in the 10.50% range. Public hearings for these cases have been scheduled for early February 1994. In the meantime, step increases for 15 districts totaling approximately $2,233,000 were authorized in January 1994. The Company received two general rate case decisions in 1993. In April, the Commission issued a decision on general rate cases filed in July 1991 for six districts, resulting in $390,000 in additional revenue and yielding a return on common equity of 11.50%. Then in August 1993, the Commission issued a decision on general rate cases filed in July 1992 for seven districts, providing a revenue increase of $3,408,000 and yielding a return on common equity of 11%. In November 1992, hearings began in the Commission's investigation of the financial and operational risks which confront water utilities today. This investigation addresses two of the most significant challenges to the California water industry--water supply and water quality and their affect on appropriate rates of return to be authorized by the Commission. The California Water Association retained expert witnesses to put forth the industry's position. Following the hearings, which concluded in 1993, the Commission will present its position on these matters through a formal decision anticipated sometime in 1994. Interim rate relief in the Stockton district totaling $1,900,000 was granted by the Commission for changes in purchased water expense, purchased power costs and pump taxes. The Commission staff's continuing review of these costs has delayed recovery since 1989 when the contract was first implemented. As part of the staff's review, an independent consultant was hired and a report is expected in early 1994. Two additional offset changes relating to the cost of surface water supplies were issued by the Commission during the past year. They included rate relief totaling $3,500,000 effective July 1, 1993, authorized to cover the increased cost of purchased water from the Metropolitan Water District of Southern California to serve the Company's four Los Angeles area districts; and a rate reduction in July and August totaling $4,300,000 for customers on the San Francisco Peninsula to reflect a 33% decrease in the cost of purchased water from the wholesale supplier, the San Francisco Water Department. Additional offset relief of $637,000 was granted for the Bakersfield district in November 1993 to allow for adjustments in the district's water production expense balancing account as permitted by the rate-making process. The Company's headquarters in San Jose was recently renovated to accommodate increased staffing levels at the General Office. This was the first remodeling since expansion of facilities to accommodate the Company's Information Systems Department in 1972. An advice letter to recover the
				 6 92
increased costs due to the renovation was filed with the CPUC in late 1993 requesting approximately $360,000 in additional revenue.
WATER SUPPLY
Water supplies in California's 155 major reservoirs were at 22.4 million acre feet on January 1, 1994, almost doubled that recorded one year earlier when the state was undergoing its sixth year of drought. The state's current reservoir supply, which is at average for this time of year, was replenished during 1993 as a result of the abundant runoff which followed the near record precipitation of the 1992-93 winter season. Twelve Company districts receive all or a portion of their supplies from surface water runoff captured by state and local reservoirs. While overall reservoir storage remained normal at the start of 1994, the snowpack in the Sierra on January 3, 1994, was approximately 45% of average for that date, indicating that the 1993-94 water year had started significantly dryer than last year's above average season. Subsequent storms in mid-February 1994, however, have greatly increased the Sierra snowpack. Although substantial reserves remain in underground aquifers which serve 16 Company districts, many groundwater tables have not fully recovered from the effects of the drought. Taking this into consideration, together with the fact that California will continue to have long-term water supply problems with future growth, the Company will maintain its water conservation efforts through a variety of customer programs initiated during the drought. Fortunately, the state's improved supply conditions have eliminated the need for water rationing. While not under a mandatory rationing program during 1994, customers in the Company's Salinas district will be asked to voluntarily cut water use by 15% to conform to a new local ordinance. The new law, which placed water use restrictions on both urban and agricultural users in Monterey County, is part of an overall program designed to curtail ocean salt water intrusion. The program is described in more detail on page 7 of this report. [Note to EDGAR 10K user: the detail of the Salinas progam is on page 94 of this report.]
Photo Captions [The photograph referred in the following paragraph, depicts two men looking at a set of blueprints with a panoramic view of the Salinas Valley in the background.] Jim Smith, left, Company District Manager in Salinas, and William Hurst, General Manager of the Monterey County Resources Agency, review options under consideration by the Agency to protect the Salinas Valley underground aquifer against salt water intrusion from Monterey Bay. Possible programs include the use of additional supplies from both the Nacimiento and San Antonio Reservoirs in the Southern Monterey County for imported surface water and groundwater recharge; the use of 20,000 acre feet of reclaimed water from the Regional Water Treatment plant in Marina, recycled for irrigation use and groundwater recharge; restrictions placed upon the Valley's urban and agricultural communities on water use; and the possible development of a new dam and reservoir in the County's Arroyo Seco area for reserve storage and recharge of the underground through the Salinas and Arroyo Seco Rivers.
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[The picture referred to the in following parapraph shows a computer designed schematic diagram of the Salinas district water distribution system with contour lines that indicate elevation.]
To assist in this overall effort, the Company has developed a computer model which creates a three dimensional hydraulic network analyses of the Salinas district distribution system. The model provides an overall view of system water pressure at all locations; system mains color coded as to size and type; sources of supply (wells); water connections; booster pumps; storage tanks and reservoirs. Through use of the computer model, the Company can simulate a variety of scenarios to determine the effectiveness of different operational modes when pumping conditions are changed.
									 									
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NOTES TO FINANCIAL STATEMENTS December 31, 1993, 1992 and 1991
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting records of the Company are maintained in accordance with the uniform system of accounts prescribed by the California Public Utilities Commission (Commission). Certain prior years' amounts have been reclassified, where necessary, to conform to the current presentation.
Revenue
Revenue consists of monthly cycle customer billings for water service at rates authorized by the Commission. Revenue from metered accounts includes unbilled amounts based on the estimated usage from the latest meter reading to the end of the accounting period. Flat rate accounts which are billed at the beginning of the service period are included in revenue on a prorata basis for the portion applicable to the current accounting period.
In October 1991 the Commission issued a decision on its investigation into the effects of the drought on water utilities which permitted the Company to recover revenue lost through water conservation as recorded in memorandum accounts. As a result, $6,951,000 of revenue lost since August 8, 1990 was recorded as revenue in December 1991 after the Commission approved district water management plans. Penalty charges totaling $3,195,000 collected from customers who had exceeded their monthly allotments were transferred to revenue while the remaining $3,756,000 was accrued as unbilled revenue in current assets. Of this amount $3,337,000 was recovered in 1992 by surcharges on customer water bills and transfers of penalty charges.
During 1992, $4,087,000 of revenue lost due to water conservation was recorded as revenue and accrued in unbilled revenue. Of $2,355,000 was recovered through customer surcharges and penalty charge transfers. As of December 31, 1992 a total of $2,151,000 of revenue lost due to water conservation was included in unbilled revenue.
In 1993, $2,904,000 was recorded as lost water conservation revenue and accrued in unbilled revenue, while $2,631,000 was recovered through customer surcharges and penalty charge transfers. As of December 31, 1993, $2,424,000 of lost water conservation revenue remains in unbilled revenue.
Utility Plant
Utility plant is carried at original cost when first constructed or purchased, except for certain minor units of property recorded at estimated fair values at dates of acquisition. Costs of depreciable plant retired are eliminated from utility plant accounts and such costs are charged against accumulated depreciation. Maintenance of utility plant, other than transportation equipment, is charged to operating expenses. Maintenance and depreciation of transportation equipment are charged to a clearing account and subsequently distributed primarily to operations. Interest is capitalized on plant expenditures during the construction period and amounted to $141,000 in 1993, $523,000 in 1992 and $293,000 in 1991.
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Intangible assets arising during the period of initial development of the Company and those acquired as parts of water systems purchased are stated at amounts prescribed by the Commission. All other intangibles have been recorded at cost.
Bond Premium, Discount and Expense
The discount and expense on first mortgage bonds is being amortized over the original lives of the related bond issues. Premiums paid on the early redemption of bonds and unamortized original issue discount and expense of those bonds are amortized over the life of new bonds issued in conjunction with the early redemption.
Cash Equivalents
Cash equivalents include highly liquid investments, primarily a money market mutual fund, stated at cost with original maturities of three months or less.
Depreciation
Depreciation of utility plant for financial statement purposes is computed on the straight-line remaining life method at rates based on the estimated useful lives of the assets. The provision for depreciation expressed as a percentage of the aggregate depreciable asset balances was 2.4% in 1993 and 2.3% in 1992 and 1991. For income tax purposes, the Company computes depreciation using the accelerated methods allowed by the respective taxing authorities.
Advances for Construction
Advances for construction of water main extensions are primarily refundable to depositors over a 20-year or 40-year period. Refund amounts under the 20-year contracts are based on annual revenues from the extensions. Unrefunded balances at the end of the contract period are credited to Contributions in Aid of Construction and are no longer refundable. Contracts entered into since 1982 provide for full refunds at a 2 1/2% rate per year for 40 years. Estimated refunds for 1994 for all water main extension contracts are $3,600,000.
Income Taxes
Effective January 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Statement 109 requires a change from the deferred method of accounting for income taxes under APB Opinion 11 to the asset and liability method. Under SFAS 109 deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Measurement of the deferred tax assets and liabilities is at enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.
				 22 101
Due to the implementation of SFAS 109 as of January 1, 1993, the Company recorded an increase in both net regulatory assets and net deferred income taxes of $9,905,000. There was no impact on the results of operations. It is anticipated that future rate action by the Commission will reflect revenue requirements for the tax effects of temporary differences recognized under SFAS 109 which have previously been flowed through to customers.
Prior to 1993, the provision for income taxes was based on income and expenses included in the Statement of Income as prescribed by APB Opinion 11. In accordance with Commission requirements, deferred taxes were not provided for items flowed through for rate-making and accounting purposes. Flow through items included excess state tax depreciation and excess federal depreciation on assets placed in service prior to 1981. Prior year amounts have not been restated to apply the provisions of SFAS 109.
The Commission has granted the Company customer rate increases to reflect the normalization of the tax benefits of the federal accelerated methods and available investment tax credits (ITC) for all assets placed in service since 1980. ITC are deferred and amortized over the lives of the related properties.
Advances for Construction and Contributions in Aid of Construction received from developers subsequent to 1986 are taxable for federal income tax purposes and subsequent to 1991 subject to state income tax.
Earnings per Share
Earnings per share is calculated using the weighted average number of common shares outstanding during the year after deducting dividend requirements on preferred stock.
NOTE 2. PREFERRED AND COMMON STOCK
As of December 31, 1993, 399,200 shares of preferred stock were authorized. Dividends on outstanding shares are payable quarterly at a fixed rate before any dividends can be paid on common stock. Preferred shares are entitled to eight votes each with the right to cumulative votes at any elections of directors.
The outstanding 139,000 shares of $25 par value cumulative, 4.4% Series C preferred shares are not convertible to common stock. A premium of $243,250 would be due upon voluntary liquidation of Series C. There is no premium in the event of an involuntary liquidation.
The Company is authorized 8,000,000 shares of no par value common stock. As of December 31, 1993 and 1992, 5,688,754 shares of common stock were issued and outstanding.
NOTE 3. SHORT-TERM BORROWINGS
As of December 31, 1993 the Company maintained a bank line of credit which provided for unsecured borrowings of up to $30,000,000 at the prime lending rate or lower rates as quoted by the bank. The agreement
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does not require minimum or specific compensating balances.
The maximum short-term borrowings outstanding during 1993, 1992 and 1991 were $33,500,000, $24,500,000, and $14,000,000, respectively.
The average amount outstanding during each of the three years was $11,746,000, $17,431,000 and $1,269,000, respectively, with weighted average interest rates on the daily balances of 4.31%, 4.85% and 5.90%, respectively.
NOTE 4. FIRST MORTGAGE BONDS
As of December 31, 1993 and 1992 first mortgage bonds outstanding were:
							 In Thousands
						 1993 1992
Series I, 4.65% due 1993 $ -- $2,565 Series J, 4.85% due 1995 2,581 2,596 Series K, 6 1/4% due 1996 2,595 2,610 Series L, 6 3/4% due 1997 2,177 2,189 Series M, 9 1/2% due 1999 -- 2,213 Series N, 9 1/4% due 2000 -- 2,670 Series O, 9 1/4% due 2000 -- 2,670 Series P, 7 7/8% due 2002 2,685 2,700 Series S, 8 1/2% due 2003 2,700 2,715 Series U, 9 1/4% due 2003 -- 2,080 Series V, 8.60% due 2006 -- 1,785 Series W, 9 3/8% due 2007 -- 2,380 Series X, 10% due 2005 -- 2,755 Series AA, 12 7/8% due 2013 -- 33,425 Series BB, 9.48% due 2008 17,370 17,460 Series CC, 9.86% due 2020 19,600 19,700 Series DD, 8.63% due 2022 19,900 20,000 Series EE, 7.90% due 2023 20,000 -- Series FF, 6.95% due 2023 20,000 -- Series GG, 6.98% due 2023 20,000 -- 						 -------- -------- 						 129,608 122,513 Less: Series AA discount --- 444 						 -------- -------- Total first mortgage bonds $129,608 $122,069 						 ======== ========
Aggregate maturities and sinking fund requirements for each of the succeeding five years 1994 through 1998 are $663,000, $3,215,000, $3,197,000, $2,759,000 and $620,000, respectively. The first mortgage bonds are secured by substantially all of the Company's utility plant.
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NOTE 5. INCOME TAXES
Income tax expense consists of the following:
					 In Thousands
1993 Federal State Total Current $6,800 $2,408 $9,208 Deferred 1,400 (8) 1,392 					 ------- ------ ------- Total $8,200 $2,400 $10,600 					 ======= ====== =======
Current $3,371 $1,650 $5,021 Deferred 3,229 -- 3,229 					 ------- ------ ------ Total $6,600 $1,650 $8,250 					 ======= ====== ======
Current $4,939 $1,750 $6,689 Deferred 2,861 -- 2,861 					 ------- ------ ------ Total $7,800 $1,750 $9,550 					 ======= ====== ====== Income tax expense differs from the amount computed by applying the current federal tax rate to pretax book income. The difference is listed in the table below:
						 In Thousands
					 1993 1992 1991
Computed "expected" tax expense $9,135 $8,332 $9,415 Increase (reduction) in taxes due to: State income taxes net of federal tax benefit 1,565 1,089 1,155 Investment tax credits (100) (85) (85) Other --- (1,086) (935) 					 ------- ------- ------ Total income tax $10,600 $8,250 $9,550 					 ======= ======= ======
The components of deferred income tax expense in 1993, 1992 and 1991 were:
						 In Thousands 					 1993 1992 1991
Depreciation $3,858 $3,314 $2,946 Developer advances and contributions (3,951) -- -- Bond redemption premiums 1,333 -- -- Other 224 -- -- Investment tax credits (72) (85) (85) 					 ------- ------ ------ Total deferred income tax expense $1,392 $3,229 $2,861 					 ======= ====== ====== 				 24 104
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1993 are presented in the following table:
						 In Thousands
Deferred tax assets: Developer deposits for extension agreements and contributions in aid of construction $25,532 Federal benefit of state tax deductions 3,798 Book plant cost reduction for future deferred ITC amortization 1,811 Insurance loss provisions 668 Miscellaneous 1,686 							 ------- Total deferred tax assets 33,495 							 -------
Deferred tax liabilities: Utility plant, principally due to depreciation differences 42,796 Premium on early retirement of bonds 1,487 Miscellaneous 257 							 ------- Total deferred tax liabilities 44,540 							 ------- Net deferred tax liability $11,045 							 =======
A valuation allowance was not required during 1993. Based on historical taxable income and future taxable income projections over the periods in which the deferred assets are deductible, management believes it is more likely than not the Company will realize the benefits of the deductible differences.
NOTE 6. EMPLOYEE BENEFIT PLANS
Pension Plan
The Company provides a uniform pension plan for substantially all employees. The cost of the plan was charged to expense and utility plant. The Company makes annual contributions to fund the amounts accrued for pension cost. Plan assets are invested in pooled equity, bond and short- term investment accounts. The data below includes the supplemental executive retirement plan.
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Net pension cost for the years ending December 31, 1993, 1992 and 1991 included the following components:
						 In Thousands
					 1993 1992 1991
Service cost-benefits earned during the period $1,167 $1,076 $1,044 Interest cost on projected obligation 2,153 1,970 1,855 Actual return on plan assets (3,672) (1,410) (4,629) Net amortization and deferral 2,132 (262) 3,385 					 ------- ------- ------- Net pension cost $1,780 $1,374 $1,655 					 ======= ======= =======
The following table sets forth the plan's funded status as of December 31, 1993 and 1992:
							 In Thousands
						 1993 1992
Accumulated benefit obligation, including vested benefits of $20,719 in 1993 and $15,849 in 1992 $(21,386) $(16,281) 						 ========= =========
Projected benefit obligation $(31,179) $(26,652) Plan assets at fair value 29,319 25,349 						 --------- --------- Projected benefit obligation in excess of plan assets (1,860) (1,303) Unrecognized net gain (4,556) (5,665) Prior service cost not yet recognized in net periodic pension cost 3,925 4,307 Remaining net transition obligation at adoption date January 1, 1987 2,288 2,574 						 --------- --------- Accrued pension liability recognized in the balance sheet $(203) $(87) 						 ========= =========
The projected long term rate of return on plan assets used in determining pension cost was 8.0% for the years 1993 to 1992. A discount rate of 7% in 1993 and 8.0% in 1992 and future compensation increases of 4.75% in 1993 and 6.0% in 1992 were used to calculate the projected benefit obligations for 1993 and 1992.
Savings Plan
The Company maintains employee savings plans which allow participants to contribute from 1% to 14% of pre-tax compensation. The Company matches fifty cents for each dollar contributed by the employee up to 6% of the employees' compensation. Company contributions were
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$606,000, $561,000 and $522,000 for the years 1993, 1992 and 1991, respectively.
Other Postretirement Plans
The Company provides substantially all active employees medical, dental and vision benefits through a self-insured plan. Employees retiring at or after age 60 with 10 or more years of service are offered, along with their spouses and dependents, continued participation in the plan. Prior to 1993, the Company's share of the costs of this plan were recorded as expense as they were paid. Retired employees are also provided with $5,000 life insurance benefit.
In 1993 the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" which requires that the costs of postretirement benefits be accrued during the employees years of active service. The Commission has issued a decision which authorizes rate recovery of tax deductible funding for postretirment benefits and permits recording of a regulatory asset for the portion of costs that will be recoverable in future rates.
Net postretirement benefit cost for 1993 included the following components:
								In Thousands
Service cost - benefits earned during the year $85 Interest cost on accumulated postretirement benefit obligation 384 Net amortization of transition obligation 248 									---- Net periodic postretirement benefit cost $717 									==== Postretirement benefit expense recorded in 1993 was $480,000. The remaining $237,000, which is recoverable through future customer rates, was recorded as a regulatory asset. The Company intends to make annual contributions to the plan up to the amount deductible for tax purposes. Plan assets are invested in high grade, short-term money market instruments and commercial paper.
The following table sets forth the plan's funded status and the plan's accrued liability as of year end:
								In Thousands Accumulated postretirement benefit obligation: Retirees $(2,850) Other fully eligible participants (657) Other active participants (1,542) 								 -------- Total (5,049) Plan assets at fair value 215 								 -------- Accumulated postretirement benefit obligation in excess of plan assets (4,834) Unrecognized net gain (119) Remaining unrecognized transition obligation 4,716 								 -------- Net postretirement benefit liability included in current liabilities $(237) 								 ======== 				 26 107
For 1994 measurement purposes, an 8% annual rate of increase in the per capita cost of covered benefits was assumed; the rate was assumed to decrease gradually to 5% in the year 2020 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1993 by $423,000 and the aggregate of the service and interest cost components of the net periodic postretirement benefit cost for the year ended December 31, 1993 by $59,000.
The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 7% at December 31, 1993 and the long term rate of return on plan assets was 8%.
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
For those financial instruments for which it is practicable to estimate a fair value the following methods and assumptions were used to estimate the fair value.
Cash and Temporary Cash Investments. The carrying amount of cash and temporary cash investments approximates fair value because of the short term maturity of the instruments.
First Mortgage Bonds. The fair value of the Company's first mortgage bonds is estimated a $133,415,000 using a discounted cash flow analysis, based on the current rates available to the Company for debt of similar maturities.
Advances for Construction. The fair value of advances for construction contracts are estimated at $22,000,000 based on data provided by brokers.
NOTE 8. QUARTERLY FINANCIAL AND COMMON STOCK MARKET DATA (Unaudited)
	 (In thousands, except per share amounts)
The Company's common stock is traded in the over-the-counter market and is quoted in the National NASDAQ list with the symbol CWTR. There were approximately 5,500 holders of common stock at December 31, 1993. Quarterly dividends have been paid on common stock for 196 consecutive quarters and the quarterly rate has been increased during each year since 1968. The 1993 and 1992 quarterly range of common stock market prices was supplied by NASDAQ.
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				First Second Third Fourth
Operating revenue $27,833 $40,504 $47,431 $35,948 Net operating income 4,116 7,747 9,377 6,615 Net income 979 4,689 6,221 3,612 Earnings per share $.17 $.82 $1.09 $.62
Common stock market price range:
High 37-1/4 36-3/4 40-1/2 41-1/4 Low 32-1/2 32-1/4 33-1/2 37-1/2
Dividends paid $.48 $.48 $.48 $.48
				First Second Third Fourth
Operating revenue $26,867 $36,972 $42,772 $33,194 Net operating income 4,620 6,437 7,076 5,641 Net income 1,811 3,617 4,225 2,876 Earnings per share $.31 $.63 $.74 $.50
Common stock market price range:
High 31 33-1/4 34-1/4 35 Low 26-1/4 28 29-1/2 29-1/4
Dividends paid $.46-1/2 $.46-1/2 $.46-1/2 $.46-1/2
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