California Water Ser vice Group
1720 Nor th First Street
San Jose, California 95112-4598
(408) 367-8200
www.calwatergroup.com
NYSE: CWT
Table of Contents
Life’s Key Ingredient 2
Letter to Stockholders 20
Ser vice Area Maps 37
Eight-Year Financial Review 40
Board of Directors 42
Corporate Officers 44
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California Water Ser vice Group 2009 Annual Repor t
California Water Ser vice Group (NYSE: CWT) is the third largest investor-owned water utility in the
United States, providing high-quality water utility ser vices to approximately two million people in
more than 100 communities through six subsidiaries: California Water Service Company (Cal Water),
Hawaii Water Service Company, Inc. (Hawaii Water), New Mexico Water Service Company (New Mexico
Water), Washington Water Ser vice Company (Washington Water), CWS Utility Ser vices (CWSUS), and
HWS Utility Ser vices (HWSUS). Cal Water, Hawaii Water, New Mexico Water, and Washington Water
provide regulated water and wastewater utility ser vices, while CWSUS and HWSUS conduct the
Company’s non-regulated business, which includes providing billing, water quality testing, and
water and wastewater system operations and management services to cities and other companies.
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California Water Ser vice Group
1720 Nor th First Street
San Jose, California 95112-4598
(408) 367-8200
www.calwatergroup.com
NYSE: CWT
Table of Contents
Life’s Key Ingredient 2
Letter to Stockholders 20
Ser vice Area Maps 37
Eight-Year Financial Review 40
Board of Directors 42
Corporate Officers 44
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California Water Ser vice Group 2009 Annual Repor t
California Water Ser vice Group (NYSE: CWT) is the third largest investor-owned water utility in the
United States, providing high-quality water utility ser vices to approximately two million people in
more than 100 communities through six subsidiaries: California Water Service Company (Cal Water),
Hawaii Water Service Company, Inc. (Hawaii Water), New Mexico Water Service Company (New Mexico
Water), Washington Water Ser vice Company (Washington Water), CWS Utility Ser vices (CWSUS), and
HWS Utility Ser vices (HWSUS). Cal Water, Hawaii Water, New Mexico Water, and Washington Water
provide regulated water and wastewater utility ser vices, while CWSUS and HWSUS conduct the
Company’s non-regulated business, which includes providing billing, water quality testing, and
water and wastewater system operations and management services to cities and other companies.
88276_CW_AR3_CVRS_R2.indd 1
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Financial Highlights
Year ended December 31 2009 2008 2007 2006 2005
Revenues rose 10% to $449 million.
Market price at year-end $ 36.82 $ 46.43 $ 37.02 $ 40.40 $ 38.23
Book value per share 20.26 19.44 18.66 18.31 15.98
Earnings per share (diluted) 1.95 1.90 1.50 1.34 1.47
Dividend per share 1.18 1.17 1.16 1.15 1.14
Revenue* 449,372 410,312 367,082 334,717 320,728
Net income increased 2% to $41 million.
Earnings per share were up 3% to $1.95.
Dividends were increased for the 42nd consecutive year
and paid for the 259th consecutive quarter.
Capital expenditures reached $111 million, up from
$108 million in 2008.
Net income* 40,554 39,805 31,159 25,580 27,223
Net utility plant rose from $1,112 million to $1,198 million.
*Dollars in thousands
Stock Transfer, Dividend Disbursing, and Reinvestment Agent
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
(800) 937-5449
To Transfer Stock
A change of ownership of shares (such as when stock is sold or gifted or when owners are deleted from or added to
stock certificates) requires a transfer of stock. To transfer stock, the owner must complete the assignment on the back
of the certificate and sign it exactly as his or her name appears on the front. This signature must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan associations, and credit unions with membership in
approved signature medallion programs) pursuant to SEC Rule 17Ad -15. A notary’s acknowledgement is not acceptable.
This certificate should then be sent to American Stock Transfer & Trust Company, by registered or certified mail with
complete transfer instructions. Alternatively, the Direct Registration System can be utilized, which allows electronic share
transactions between your broker or dealer and American Stock Transfer & Trust Company.
Bond Registrar
US Bank Trust, N.A.
One California Street
San Francisco, CA 94111-5402
(415) 273-4580
Annual Meeting
The Annual Meeting of Stockholders will be held on Tuesday, May 25, 2010, at 9:30 a.m. at the Company’s Executive
Office, located at 1720 North First Street in San Jose, California. Details of the business to be transacted during the meet-
ing will be contained in the proxy material, which will be mailed to stockholders on or about April 9, 2010.
Anticipated Dividend Dates For 2010
Quarter Declaration Record Date Payment Date
First January 27 February 8 February 19
Second April 28 May 10 May 21
Third July 28 August 9 August 20
Fourth October 27 November 8 November 19
Annual Report For 2009 On Form 10-K
A copy of the Company’s report for 2009 filed with the Securities and Exchange Commission (SEC) on Form 10-K will be
available in April 2010 and can be obtained by any stockholder at no charge upon written request to the address below.
The Company’s filings with the SEC can be viewed via the link to the SEC’s EDGAR system on the Company’s web site.
Executive Office and Stockholder Information
California Water Service Group
Attn: Stockholder Relations
1720 North First Street
San Jose, CA 95112-4598
(408) 367-8200 or (800) 750-8200
http://www.calwatergroup.com
The pages in this report are 10% post-consumer fiber, FSC- certified, and from the Domtar EarthChoice® family of paper.
88276_CW_AR3_CVRS.indd 2
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Financial Highlights
Year ended December 31 2009 2008 2007 2006 2005
Revenues rose 10% to $449 million.
Market price at year-end $ 36.82 $ 46.43 $ 37.02 $ 40.40 $ 38.23
Book value per share 20.26 19.44 18.66 18.31 15.98
Earnings per share (diluted) 1.95 1.90 1.50 1.34 1.47
Dividend per share 1.18 1.17 1.16 1.15 1.14
Revenue* 449,372 410,312 367,082 334,717 320,728
Net income increased 2% to $41 million.
Earnings per share were up 3% to $1.95.
Dividends were increased for the 42nd consecutive year
and paid for the 259th consecutive quarter.
Capital expenditures reached $111 million, up from
$108 million in 2008.
Net income* 40,554 39,805 31,159 25,580 27,223
Net utility plant rose from $1,112 million to $1,198 million.
*Dollars in thousands
Stock Transfer, Dividend Disbursing, and Reinvestment Agent
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
(800) 937-5449
To Transfer Stock
A change of ownership of shares (such as when stock is sold or gifted or when owners are deleted from or added to
stock certificates) requires a transfer of stock. To transfer stock, the owner must complete the assignment on the back
of the certificate and sign it exactly as his or her name appears on the front. This signature must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan associations, and credit unions with membership in
approved signature medallion programs) pursuant to SEC Rule 17Ad -15. A notary’s acknowledgement is not acceptable.
This certificate should then be sent to American Stock Transfer & Trust Company, by registered or certified mail with
complete transfer instructions. Alternatively, the Direct Registration System can be utilized, which allows electronic share
transactions between your broker or dealer and American Stock Transfer & Trust Company.
Bond Registrar
US Bank Trust, N.A.
One California Street
San Francisco, CA 94111-5402
(415) 273-4580
Annual Meeting
The Annual Meeting of Stockholders will be held on Tuesday, May 25, 2010, at 9:30 a.m. at the Company’s Executive
Office, located at 1720 North First Street in San Jose, California. Details of the business to be transacted during the meet-
ing will be contained in the proxy material, which will be mailed to stockholders on or about April 9, 2010.
Anticipated Dividend Dates For 2010
Quarter Declaration Record Date Payment Date
First January 27 February 8 February 19
Second April 28 May 10 May 21
Third July 28 August 9 August 20
Fourth October 27 November 8 November 19
Annual Report For 2009 On Form 10-K
A copy of the Company’s report for 2009 filed with the Securities and Exchange Commission (SEC) on Form 10-K will be
available in April 2010 and can be obtained by any stockholder at no charge upon written request to the address below.
The Company’s filings with the SEC can be viewed via the link to the SEC’s EDGAR system on the Company’s web site.
Executive Office and Stockholder Information
California Water Service Group
Attn: Stockholder Relations
1720 North First Street
San Jose, CA 95112-4598
(408) 367-8200 or (800) 750-8200
http://www.calwatergroup.com
The pages in this report are 10% post-consumer fiber, FSC- certified, and from the Domtar EarthChoice® family of paper.
88276_CW_AR3_CVRS.indd 2
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We see life’s
key ingredient.
Good, clean water.
It is irreplaceable,
and the only way to
truly comprehend its
value is to imagine
life without it.
88276_CW_AR3_R1.indd 3
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Imagine not having water
to drink ... to grow and produce
food ... to put out fires. It’s not only
essential; it also enriches our daily
lives. Think about it – can you imagine
a life without hot showers, cold
lemonade, and flourishing gardens?
We can’t. That’s why we take our
responsibility for delivering life’s key
ingredient so seriously. From the
source to the tap, and ever y step
along the way, we work diligently
to deliver the good, clean water
that makes life possible.
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AR 09 | 3
Guardians, caretakers, protectors, and defenders — we are all these
things and more as we shepherd life’s key ingredient from the source to the tap.
AR 09 | 4
The Source
Our water sources can be as close as the ground beneath our feet
or as far as 500 miles away from the communities we ser ve. Near or far, we
are responsible for working cooperatively with other agencies to manage, protect, and
maintain the watersheds, sur face supplies, and underground aquifers that provide water
to meet our customers’ needs. Our commitment is evidenced in the extensive analysis in
our 20 -year water supply master plans, vigilant oversight of water sources, careful
monitoring of groundwater levels and quality, and aggressive pursuit of polluters.
John A. Gomez, Production Superintendent
88276_CW_AR3_R1.indd 8
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AR 09 | 6
Treatment & Storage
Once secured, our water must be treated, and in some cases stored,
until customers need it. We use the best available technologies to treat our water,
depending upon its initial quality. In some cases, simple disinfection is adequate; in others,
we use highly sophisticated filtration and ultraviolet treatment technologies. After treatment,
some of the water is sent to storage tanks until it’s needed. Storage is key to reliability,
and we take a methodical, comprehensive approach to maintaining our storage tanks, which
have a combined storage capacity of nearly 500 million gallons – enough to give
ever y person on ear th one 9-ounce glass of water.
Frank R. Herrera, Jr., Treatment Plant Operator
88276_CW_AR3_R1.indd 10
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AR 09 | 8
Monitoring & Testing
Because protecting customer health and safety is our highest priority, water
quality is of utmost impor tance. We rigorously monitor water quality both at the source
and in the distribution system. In the field, our water professionals check facilities, monitor
disinfection levels, and collect samples for testing. At our state - cer tified water quality
laborator y in San Jose, California, our scientists conduct more than 300,000 water quality
tests per year and analyze the water for more than 100 elements and compounds.
Kristy S. Fournier, Microbiologist
88276_CW_AR3_R1.indd 12
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AR 09 | 10
Distribution System
Customers also rely on us to take care of the system of pumps, pipes, valves,
and hydrants used to convey water to their homes and businesses. To ensure the integrity
and reliability of our water distribution systems, we diligently maintain and upgrade our
facilities; in fact, in 2010, we plan to replace about 100,000 feet of water main – a distance
that is more than three times the altitude flown by the typical commercial jet. We also provide
24- hour emergency ser vice to ensure a reliable supply for customers and minimize
water lost to leaks, use alternative energy where it makes sense to do so, and conduct
water system repairs in a way that protects the surrounding environment.
Matthew K. Rober tson, Cer tified Pump Operator
88276_CW_AR3_R1.indd 14
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Promoting Conser vation
Par t of being a good steward of the precious natural resource we provide is
educating the public about the impor tance of water conser vation. We star t early, taking
our message to the classroom and instilling in our children an appreciation for the value
and impor tance of water. For the grown- ups we ser ve, we offer traditional and innovative
conser vation programs, including high-efficiency appliance rebates, water-use audits,
plumbing retrofit kits, and direct - installation programs for low-income customers.
Matthew T. Kang, Superintendent and Speakers Bureau Member
88276_CW_AR3_R1.indd 16
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AR 09 | 14
The Customer
With a simple turn of the wrist, it’s there. It’s there for her morning shower.
It’s there for her cup of tea. It’s there for the fire hydrant in front of her home. She may
not realize how many of us played a role in getting it there, but because we take our
responsibility seriously ever y step of the way, she can simply rely on us to provide
good, clean water whenever she needs it.
Kristin De La Paz, Customer
88276_CW_AR3_R1.indd 18
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88276_CW_AR3_R1.indd 20
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AR 09 | 17
Yes, we are guardians, caretakers, protectors, and defenders, responsible for
shepherding water from the source to the tap. We are not just doing a job, we are
fulfilling an impor tant mission: We deliver life’s key ingredient, and it is
not only essential to life, it enhances life in so many ways.
As we’ve said, we take our
responsibility for delivering life’s
key ingredient ver y seriously,
and we are committed to being
good stewards of this precious
natural resource.
But our responsibility goes
beyond the water we provide; it
extends to our stockholders,
our employees, our communities,
and the environment.
88276_CW_AR3_R2.indd 22
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X-OVER
Peter C. Nelson
President and Chief Executive Officer
(left)
Robert W. Foy
Chairman of the Board
88276_CW_AR3_R1.indd 23
X-OVER
3/2/10 9:09:16 PM
AR 09 | 20
To Our Stockholders
We hear it so often, but what exactly does
the term “corporate responsibility” mean?
For the California Water Service Group, it simply
means “doing what’s right.” And while we applaud
businesses that are producing sustainability
repor ts, environmental scorecards, and
corporate responsibility updates, we think what
we do is more important than what we say. That’s
why we are committed to doing what’s right – for
our customers, our stockholders, our employees,
our communities, and our environment.
Doing What’s Right for Our Customers
By doing what’s right for the customer from
the source to the tap (as described on previous
pages), we do the right thing for our stockholders.
Why? Because to ser ve our customers well, we
must invest in our infrastructure, operate efficiently,
and earn customer loyalty by providing excellent
ser vice and high-quality water. All these things
benefit stockholders and provide long-term value.
88276_CW_AR3_R1.indd 24
3/2/10 9:10:40 PM
Five -Year Net Utility Plant
(Dollars in thousands)
1,198,077 09
1,112,367 08
1,010,196 07
941,475 06
862,731 05
88276_CW_AR3_R2.indd 25
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Five-Year Dividend Growth
1.18 09
1.17 08
1.16 07
1.15 06
1.14 05
88276_CW_AR3_R2.indd 26
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AR 09 | 23
Doing What’s Right for Our Stockholders
Our 2009 results benefited from $50 million in rate
relief and $11 million from sales to new customers.
The Water Revenue Adjustment Mechanism (WRAM)
and Modified Cost Balancing Account (MCBA) added
$10 million, offsetting decreased sales to existing
customers and higher production costs. These
gains were reduced by higher expenses in nearly
ever y categor y. Because 2010 is the third year of
the three-year rate case cycle for California Water
Ser vice Company, our largest subsidiar y, our
ability to successfully manage expenses in the
coming year will be critical.
Successfully executing our business strategy will be
equally critical, and we will continue to concentrate
our efforts on prudent fiscal management, effective
regulator y affairs management, disciplined growth,
diligent investment in infrastructure, and excellent
customer ser vice and water quality.
One key element of prudent fiscal management is
strong and transparent corporate governance, and
we are proud to be among the highest - ranked water
utilities by the Corporate Librar y.
88276_CW_AR3_R2.indd 27
3/8/10 1:25:34 AM
X-OVER
X-OVER
$600
$500
$400
3
0
$300
$200
$100
2
0
1
0
0
0
9
9
8
9
7
9
9 6
95
94
93
2
9
1
09
99
8
88276_CW_AR3_R5.indd 28
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X-OVER
X-OVER
X-OVER
X-OVER
AR 09 | 25
09
07
06
0 5
0 4
$700
08
$800
CWT 20 -Year Total Return on Investment
(On stock purchased December 31, 1989,
with dividends reinvested)
X-OVER
88276_CW_AR3_R5.indd 29
X-OVER
3/10/10 3:14:37 PM
AR 09 | 26
In 2009, we amended the Board of Directors’
Finance Committee Charter to include responsibility
for risk management and formed an Enterprise Risk
Management Committee consisting of five Officers
to review and guide the risk management process.
We also brought Washington Water Ser vice Company
and New Mexico Water Ser vice Company onto the
financial software platform used for California Water
Ser vice Company, which improves internal controls
and lowers our transaction and audit costs.
In addition to strengthening internal controls
and complying with Sarbanes- Oxley requirements,
our management team achieved several key goals
that reflect our commitment to prudent fiscal man-
agement. First, we amended and restated our 1928
bond indenture, which enabled us to eliminate
higher-cost bonds and reduce administrative costs.
We also completed the largest debt offering in
company history, issuing $100 million of AA- Standard
& Poor’s-rated first mor tgage bonds at a lower
interest rate than our average cost of debt. The new
indenture reduces our compliance costs and gives
us greater flexibility to respond to changing market
conditions by broadening the type of debt we can
issue. Finally, we put in place a $300 million
88276_CW_AR3_R2.indd 30
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Five-Year Book Value
20.26 09
19.44 08
18.66 07
18.31 06
15.98 05
88276_CW_AR3_R2.indd 31
3/8/10 2:02:44 AM
Five-Year Operating Revenue
(Dollars in thousands)
449,372 09
410,312 08
367,082 07
334,717 06
320,728 05
88276_CW_AR3_R2.indd 32
3/8/10 10:42:57 AM
AR 09 | 29
unsecured, syndicated line of credit, which provides
us greater liquidity and allows us to continue to
build our business.
Another element of our business strategy is
effective regulator y affairs management, and in
2009, we filed our first- ever statewide General Rate
Case with the California Public Utilities Commission.
The effort required to assemble a comprehensive
and compelling case for ever y one of our California
districts is monumental, and our team continues
to work through the process in order to achieve a
favorable outcome when the Commission issues
a final decision and new rates become effective
in 2011.
As for growth, in 2009, we acquired two small
water systems near our Bear Gulch District. We take
a disciplined approach to growth through acquisitions
and pursue opportunities that add value for stock-
holders and customers. Beyond adding customers,
we can increase stockholder value by investing in
infrastructure upgrades that our states’ respective
public utilities commissions agree are beneficial to
customers. To that end, we invested $111 million
in capital projects in 2009.
88276_CW_AR3_R1.indd 33
3/2/10 9:34:23 PM
Another important facet of our business
strategy is providing excellent customer ser vice
and high-quality water, part of which is achieved
by investing wisely in our water systems, and part
of which is achieved by engaging our people in
continuously improving the way we do business.
In 2009, we provided customer service training to
all field employees, began mobile-dispatching,
and consolidated billing for our Hawaii customers,
all of which enabled our employees to provide
better customer ser vice.
Doing What’s Right for Our Employees
This brings us to another constituent to whom
we are responsible–our employees. In addition
to offering compensation packages that attract,
retain, and motivate our employees, we provide
health, dental, and vision care benefits and a 401(k)
savings plan with a company - match component.
We enjoy an excellent relationship with the unions
that represent our employees, the Utility Workers
Union of America, A.F.L. - C.I.O. and the International
Federation of Professional and Technical Engineers,
A.F.L.- C.I.O. In fact, to address the issue of increas-
ing health care costs, we worked with the unions
to form a Joint Health Care Committee, whose
goal is to create the healthiest workforce in the
industr y through education and a variety of
health-related programs.
88276_CW_AR3_R1.indd 34
3/2/10 9:34:59 PM
AR 09 | 31
In terms of training, we offer on-site
professional development opportunities as
well as a tuition reimbursement program. We
also view our Continuous Improvement approach
to the business as a valuable development tool.
Through Continuous Improvement, every employee
works on projects that improve efficiency or
enhance customer ser vice. In the process,
employees build analytical and public speaking
skills as they formulate and present business
cases to a panel of Officers and Department Heads.
Doing What’s Right for Our Communities
Our employees are dedicated professionals
who live in the communities we ser ve, and they
are instrumental in enabling us to do what is
right for our communities and our environment.
Many of them are actively involved in organiza-
tions that provide community ser vices, from food
banks to ser vice clubs to youth-enrichment
programs. Fur ther, our stockholders contribute
to 150 local charitable organizations throughout
our ser vice areas, focusing on those that
meet the unique needs of customers in each
community we ser ve.
88276_CW_AR3_R1.indd 35
3/2/10 9:35:21 PM
To assist customers in need more directly, we
offer a Low-Income Ratepayer Assistance Program
to all qualified California customers and a Rate
Suppor t Fund to help customers in areas where
water is more costly. We also make ever y effort to
offer payment arrangements to customers having
difficulty paying their bills, and are planning to pilot a
Balanced Payment Plan option to allow customers
to spread water costs evenly over a 12- month period
to avoid higher bills during high-usage months.
Beyond that, we directly market conser vation
programs to low-income customers and offer a
range of conser vation programs to all customers
to help them reduce their water bills.
Doing What’s Right for Our Environment
Perhaps the most impor tant of all of our
efforts to protect our environment and preser ve
natural resources is our robust water conser vation
program. We were the first to request and receive
California Public Utilities Commission approval
for a Water Revenue Adjustment Mechanism that
removed previous financial disincentives for
achieving conser vation targets, which means we
can now promote conser vation without negatively
impacting stockholders. To help our customers
control their bills and conser ve water, we have
doubled our spending on conser vation and
88276_CW_AR3_R1.indd 36
3/2/10 9:35:47 PM
AR 09 | 33
are beginning to implement a range of programs
designed to reduce customer usage in California
by 20% by 2020.
To further increase available water supplies for
customers of today and tomorrow, we provide
recycled water in our Dominguez, Hermosa-Redondo,
and Westlake systems. In fact, we have been
contracted to operate and maintain the entire
distribution system of West Basin Municipal Water
District’s recycled water plant in El Segundo,
California, the largest water recycling plant of
its kind in the United States. Overall, we provide
about 2.25 billion gallons of recycled water per
year to customers ser ved by these three water
systems. We also supplement potable water
supplies with recycled water from two of our 10
wastewater treatment plants, and two more will
soon be upgraded and producing water for irriga-
tion. And at all of our wastewater treatment plants,
we are committed to meeting or surpassing all
environmental regulations, 365 days per year,
24 hours per day, seven days per week.
Because we provide a natural resource, we
have many opportunities to positively impact our
environment. From an operations standpoint,
88276_CW_AR3_R1.indd 37
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AR 09 | 34
we have Best Management Practices in place
to protect the environment, whether we are
repairing a leak or testing a fire hydrant. We
manage our watershed in Woodside, California,
in a way that protects local wildlife, operate wells
and pumps to maximize energy-use efficiency, and
maintain our systems diligently to minimize water
loss. We use solar power at some of our facilities,
and are currently analyzing additional wind and
solar power projects. In addition, similar to many
other businesses, we are working to earn
Leadership in Energy & Environmental Design
(LEED) certification from the U.S. Green Building
Council on new buildings, increasing our use of
hybrid vehicles, and reducing our waste through
recycling programs and our e-billing payment
option for customers.
It all comes down to doing the right thing
for our customers, stockholders, employees,
communities, and environment, and we feel ver y
good about where we are and where we are going
as a company … because we’re not just doing
our jobs, we’re fulfilling a mission.
We thank you for the role you play in enabling
us to provide a life -sustaining natural resource
and wish you the ver y best in 2010.
88276_CW_AR3_R1.indd 38
3/2/10 9:36:39 PM
Peter C. Nelson
President and Chief Executive Officer
Rober t W. Foy
Chairman of the Board
88276_CW_AR3_R1.indd 39
3/2/10 9:37:29 PM
We operate 353 water systems
and 10 wastewater systems ser ving
approximately two million people
in more than 100 California,
Hawaii, New Mexico, and
Washington communities.
We continue to pursue
quality water and wastewater
systems that complement our
core business and increase value
for our stockholders.
88276_CW_AR3_R5.indd 40
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Hawaii Operations/ Customer Centers
AR 09 | 37
Washington Operations/ Customer Centers
(Maui) Ka’anapali • (Hawaii) Waikoloa
Ser ving the communities of Ka’anapali, Pukalani,
Waimea, Waikoloa, Nor th Kona Coast, and Kohala
Coast on the islands of Maui and Hawaii.
Regulated Customer Connections
3,700* 08
4,200* 09
* Includes several large resor ts
and condominium complexes.
Olympia (S.W. Regional Office) •
Gig Harbor (N.W. Regional Office and
Customer Center) • Sequim • Issaquah •
Orcas Island (Field Offices)
Ser ving more than 425 neighborhoods and small
communities in the counties of Clallam, Jefferson,
Kitsap, Mason, Pierce, King, San Juan, and Thurston.
Regulated Customer Connections
15,800 08
15,600 09
88276_CW_AR3_R2.indd 41
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AR 09 | 38
California Districts
Antelope Valley • Bakersfield • Bear Gulch • Chico •
Commerce • Dixon • Dominguez • East Los Angeles •
Hawthorne • Hermosa-Redondo • Kern River Valley •
King City • Livermore • Los Altos • Mar ysville •
Mid-Peninsula • Oroville • Palos Verdes • Redwood
Valley • Salinas • Selma • South San Francisco •
Stockton • Visalia • Westlake • Willows
Customer Connections*
463,400 08
467,100 09
* Numbers include Hawthorne
and Commerce lease agreements
New Mexico Operations/ Customer Centers
Elephant Butte • Belen • Cedar Crest
Ser ving the communitites of Meadow Lake, Cypress
Gardens, Rio Communities, Rio Del Oro, Elephant Butte,
Sandia Knolls, and Cedar Crest in the counties of Sierra,
Valencia, and Bernalillo.
Regulated Customer Connections
7,600 08
7,800 09
88276_CW_AR3_R2.indd 42
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California Districts
& Communities
2009 2008
Antelope Valley • Fremont Valley, Lake Hughes, Lancaster & Leona Valley 1,400 1,400
Bakersfield 66,900 65,500
Bear Gulch • Ather ton, Woodside, Por tola Valley & a por tion of Menlo Park 18,600 18,100
Chico • Hamilton City 27,700 27,400
Commerce (lease agreement) 1,200 1,200
Dixon 2,800 2,800
Dominguez • Carson and por tions of Compton, Harbor City, Long Beach,
Los Angeles County & Torrance 33,700 33,700
East Los Angeles • Por tions of Montebello, Commerce, Monterey Park & Vernon 26,600 26,700
Hawthorne (lease agreement) 6,200 6,200
Hermosa-Redondo • Hermosa Beach, Redondo Beach & a por tion of Torrance 26,500 26,500
Kern River Valley • Bodfish, Kernville, Lakeland, Mountain Shadows, Onyx,
Squirrel Valley, South Lake & Wofford Heights 4,300 4,300
King City 2,500 2,500
Livermore 18,200 18,200
Los Altos • Por tions of Cuper tino, Los Altos Hills, Mountain View & Sunnyvale 18,700 18,600
Mar ysville 3,700 3,700
Mid-Peninsula • San Mateo & San Carlos 36,200 36,200
Oroville 3,600 3,600
Palos Verdes • Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills
& Rolling Hills Estates 24,000 24,000
Redwood Valley • Lucerne & por tions of Duncans Mills, Guerneville,
Dillon Beach, Noel Heights & Santa Rosa 2,000 1,900
Salinas 27,900 27,800
Selma 6,000 6,000
South San Francisco • Colma & Broadmoor 16,800 16,800
Stockton 42,400 41,500
Visalia 39,800 39,200
Westlake • Westlake Village & a por tion of Thousand Oaks 7,000 7,100
Willows 2,400 2,400
88276_CW_AR3_R1.indd 43
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Eight-Year Financial Review
(Dollars in thousands, except common share data) 2009
2008
2007
2006
2005
2004
2003
2002
Summar y of Operations
Operating revenue
449,372 410,312
367,082 334,717 320,728
315,567 277,128 263,151
Operating expenses
391,253 352,843
322,912 294,411 278,903
273,488 244,167 230,301
Interest expense, other income and expenses, net
17,565
17,664
13,011
14,726 14,602
16,053
13,544 13,777
Net income
$40,554 $39,805
$31,159 $25,580 $27,223
$26,026 $19,417 $19,073
Common Share Data
Earnings per share - diluted
$1.95
$1.90
$1.50
$1.34 $1.47
$1.46
$1.21 $1.25
Dividend declared
1.180
1.170
1.160
1.150 1.140
1.130
1.125
1.120
Dividend payout ratio
61%
62%
77%
86%
78%
77%
93%
90%
Book value
$20.26
$19.44
$18.66
$18.31 $15.98
$15.66
$14.44 $13.12
Market price at year-end 36.82
46.43
37.02
40.40 38.23
37.65
27.40 23.65
Common shares outstanding at year-end (in thousands) 20,765
20,723
20,666
20,657 18,390
18,367
16,932 15,182
Return on average common stockholders’ equity 9.8%
10.2%
8.1%
8.2%
9.3%
9.8%
9.1%
9.7%
Long-term debt interest coverage
4.04
4.72
3.70
3.17
3.61
3.38
2.78 2.73
Balance Sheet Data
Net utility plant $1,198,077 $1,112,367
$1,010,196 $941,475 $862,731
$800,305 $759,498 $696,988
Total assets
1,525,581 1,418,107
1,184,499 1,165,019 996,945
942,853 873,035 798,478
Long-term debt, including current portion
387,222 290,316
291,921 293,592 275,275
275,921 273,130 251,365
Capitalization ratios:
Common stockholders’ equity 52.1%
58.1%
56.9%
51.4%
50.8%
47.0%
44.0%
Preferred stock
0 %
0 %
0.5%
0.6%
0.6%
0.7%
0.7%
56.0%
0.5%
Long-term debt
47.9%
41.9%
42.6%
43.5%
48.0%
48.6%
52.3%
55.3%
Other Data
Water production (million gallons)
131,558 137,757
141,238 132,414 129,453
139,039 131,680 132,225
Customers at year-end, including Hawthorne
494,700 490,500
487,600 483,893 479,001 473,155 466,422 458,988
New customers added 4,200
2,900
3,700
4,892 5,846
6,733
7,434 8,561
Revenue per customer $908
$837
$753
$692 $670
$667
$594 $579
Utility plant per customer
3,455
3,228
2,968
2,778 2,578
2,418
2,313 2,182
Employees at year-end 1,013
929
891
869
840
837
813 802
88276_CW_AR3_R1.indd 44
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AR 09 | 41
Summar y of Operations
Common Share Data
Balance Sheet Data
Capitalization ratios:
Other Data
(Dollars in thousands, except common share data) 2009
2008
2007
2006
2005
2004
2003
2002
Operating revenue
449,372 410,312
367,082 334,717 320,728
315,567 277,128 263,151
Operating expenses
391,253 352,843
322,912 294,411 278,903
273,488 244,167 230,301
Interest expense, other income and expenses, net
17,565
17,664
13,011
14,726 14,602
16,053
13,544 13,777
Net income
$40,554 $39,805
$31,159 $25,580 $27,223
$26,026 $19,417 $19,073
Earnings per share - diluted
$1.95
$1.90
$1.50
$1.34 $1.47
$1.46
$1.21 $1.25
Dividend declared
1.180
1.170
1.160
1.150 1.140
1.130
1.125
1.120
Dividend payout ratio
61%
62%
77%
86%
78%
77%
93%
90%
Book value
$20.26
$19.44
$18.66
$18.31 $15.98
$15.66
$14.44 $13.12
Market price at year-end 36.82
46.43
37.02
40.40 38.23
37.65
27.40 23.65
Common shares outstanding at year-end (in thousands) 20,765
20,723
20,666
20,657 18,390
18,367
16,932 15,182
Return on average common stockholders’ equity 9.8%
10.2%
8.1%
8.2%
9.3%
9.8%
9.1%
9.7%
Long-term debt interest coverage
4.04
4.72
3.70
3.17
3.61
3.38
2.78 2.73
Net utility plant $1,198,077 $1,112,367
$1,010,196 $941,475 $862,731
$800,305 $759,498 $696,988
Total assets
1,525,581 1,418,107
1,184,499 1,165,019 996,945
942,853 873,035 798,478
Long-term debt, including current portion
387,222 290,316
291,921 293,592 275,275
275,921 273,130 251,365
Common stockholders’ equity 52.1%
58.1%
56.9%
Preferred stock
0 %
0 %
0.5%
56.0%
0.5%
51.4%
50.8%
47.0%
44.0%
0.6%
0.6%
0.7%
0.7%
Long-term debt
47.9%
41.9%
42.6%
43.5%
48.0%
48.6%
52.3%
55.3%
Water production (million gallons)
131,558 137,757
141,238 132,414 129,453
139,039 131,680 132,225
Customers at year-end, including Hawthorne
494,700 490,500
487,600 483,893 479,001 473,155 466,422 458,988
New customers added 4,200
2,900
3,700
4,892 5,846
6,733
7,434 8,561
Revenue per customer $908
$837
$753
$692 $670
$667
$594 $579
Utility plant per customer
3,455
3,228
2,968
2,778 2,578
2,418
2,313 2,182
Employees at year-end 1,013
929
891
869
840
837
813 802
88276_CW_AR3_R1.indd 45
3/3/10 5:20:02 PM
Board of Directors
Peter C. Nelson
President and Chief Executive Officer
14 Years ser ved as a Board Member.
Member of the Executive Committee.
Rober t W. Foy
Chairman of the Board
33 Years ser ved as a Board Member.
Member of the Executive Committee.
Richard P. Magnuson
Private Venture Capital Investor
14 Years ser ved as a Board Member.
Member of the following Committees:
Audit, Organization/Compensation,
Executive, Finance/Risk Management,
and Nominating/Corporate Governance.
Edward D. Harris, Jr., M.D.
Professor of Medicine, Emeritus,
Stanford University Medical Center
17 Years ser ved as a Board Member.
Member of the following Committees:
Organization/Compensation, Executive,
and Nominating/Corporate Governance.
88276_CW_AR3_R2.indd 46
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AR 09 | 43
16 Years ser ved as a Board Member.
Member of the following Committees: Audit,
Executive, Organization/Compensation,
and Nominating/Corporate Governance.
Linda R. Meier
Member of the National Board of the
Institute of International Education
12 Years ser ved as a Board Member.
Member of the following Committees:
Audit, Finance/Risk Management,
and Nominating/Corporate Governance.
George A. Vera
Vice President and Chief Financial Officer,
the David and Lucile
Packard Foundation
9 Years ser ved as a Board Member.
Member of the following Committees: Audit,
Executive, Finance/Risk Management, and
Nominating/Corporate Governance.
Douglas M. Brown
Dean, Anderson School of Business,
University of New Mexico
7 Years ser ved as a Board Member.
Member of the following Committees:
Organization/Compensation and
Nominating/Corporate Governance.
Bonnie G. Hill
President of B. Hill Enterprises, L.L.C.
2 Years ser ved as a Board Member.
Member of the following Committees:
Organization/Compensation, Finance/
Risk Management, and Audit.
Edwin A. Guiles
Former Executive Vice President of
Corporate Development, Sempra Energy
88276_CW_AR3_R2.indd 47
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AR 09 | 44
Officers
California Water Service Company
Peter C. Nelson 1, 2, 3
President and Chief Executive Officer
Paul G. Ekstrom
Vice President, Customer Service,
Human Resources, and Information Technology
Francis S. Ferraro 2, 4
Vice President, Corporate Development
Robert R. Guzzetta 2
Vice President, Operations
Martin A. Kropelnicki 1, 2, 3
Vice President, Chief Financial Officer
and Treasurer
Christine L. McFarlane 3
Vice President, Chief Administrative Officer
Michael J. Rossi 2, 3
Vice President, Engineering
and Water Quality
Thomas F. Smegal III 4
Vice President, Regulatory Matters
and Corporate Relations
Calvin L. Breed 1, 2, 3
Controller, Assistant Secretary
and Assistant Treasurer
Lynne P. McGhee 1, 2, 3
Corporate Secretary
Washington Water Service Company
Michael P. Ireland
President
1 Holds the same position with California Water
Service Group.
2 Also an officer of CWS Utility Services.
3 Also an officer of Washington Water Service Company,
New Mexico Water Service Company, and Hawaii Water
Service Company, Inc.
4 Holds the same position with New Mexico Water Service
Company and Hawaii Water Service Company, Inc.
88276_CW_AR3_R1.indd 48
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Financial Highlights
Year ended December 31 2009 2008 2007 2006 2005
Revenues rose 10% to $449 million.
Market price at year-end $ 36.82 $ 46.43 $ 37.02 $ 40.40 $ 38.23
Book value per share 20.26 19.44 18.66 18.31 15.98
Earnings per share (diluted) 1.95 1.90 1.50 1.34 1.47
Dividend per share 1.18 1.17 1.16 1.15 1.14
Revenue* 449,372 410,312 367,082 334,717 320,728
Net income increased 2% to $41 million.
Earnings per share were up 3% to $1.95.
Dividends were increased for the 42nd consecutive year
and paid for the 259th consecutive quarter.
Capital expenditures reached $111 million, up from
$108 million in 2008.
Net income* 40,554 39,805 31,159 25,580 27,223
Net utility plant rose from $1,112 million to $1,198 million.
*Dollars in thousands
Stock Transfer, Dividend Disbursing, and Reinvestment Agent
American Stock Transfer & Trust Company
59 Maiden Lane
New York, NY 10038
(800) 937-5449
To Transfer Stock
A change of ownership of shares (such as when stock is sold or gifted or when owners are deleted from or added to
stock certificates) requires a transfer of stock. To transfer stock, the owner must complete the assignment on the back
of the certificate and sign it exactly as his or her name appears on the front. This signature must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan associations, and credit unions with membership in
approved signature medallion programs) pursuant to SEC Rule 17Ad -15. A notary’s acknowledgement is not acceptable.
This certificate should then be sent to American Stock Transfer & Trust Company, by registered or certified mail with
complete transfer instructions. Alternatively, the Direct Registration System can be utilized, which allows electronic share
transactions between your broker or dealer and American Stock Transfer & Trust Company.
Bond Registrar
US Bank Trust, N.A.
One California Street
San Francisco, CA 94111-5402
(415) 273-4580
Annual Meeting
The Annual Meeting of Stockholders will be held on Tuesday, May 25, 2010, at 9:30 a.m. at the Company’s Executive
Office, located at 1720 North First Street in San Jose, California. Details of the business to be transacted during the meet-
ing will be contained in the proxy material, which will be mailed to stockholders on or about April 9, 2010.
Anticipated Dividend Dates For 2010
Quarter Declaration Record Date Payment Date
First January 27 February 8 February 19
Second April 28 May 10 May 21
Third July 28 August 9 August 20
Fourth October 27 November 8 November 19
Annual Report For 2009 On Form 10-K
A copy of the Company’s report for 2009 filed with the Securities and Exchange Commission (SEC) on Form 10-K will be
available in April 2010 and can be obtained by any stockholder at no charge upon written request to the address below.
The Company’s filings with the SEC can be viewed via the link to the SEC’s EDGAR system on the Company’s web site.
Executive Office and Stockholder Information
California Water Service Group
Attn: Stockholder Relations
1720 North First Street
San Jose, CA 95112-4598
(408) 367-8200 or (800) 750-8200
http://www.calwatergroup.com
The pages in this report are 10% post-consumer fiber, FSC- certified, and from the Domtar EarthChoice® family of paper.
88276_CW_AR3_CVRS.indd 2
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California Water Ser vice Group
1720 Nor th First Street
San Jose, California 95112-4598
(408) 367-8200
www.calwatergroup.com
NYSE: CWT
Table of Contents
Life’s Key Ingredient 2
Letter to Stockholders 20
Ser vice Area Maps 37
Eight-Year Financial Review 40
Board of Directors 42
Corporate Officers 44
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California Water Ser vice Group 2009 Annual Repor t
California Water Ser vice Group (NYSE: CWT) is the third largest investor-owned water utility in the
United States, providing high-quality water utility ser vices to approximately two million people in
more than 100 communities through six subsidiaries: California Water Service Company (Cal Water),
Hawaii Water Service Company, Inc. (Hawaii Water), New Mexico Water Service Company (New Mexico
Water), Washington Water Ser vice Company (Washington Water), CWS Utility Ser vices (CWSUS), and
HWS Utility Ser vices (HWSUS). Cal Water, Hawaii Water, New Mexico Water, and Washington Water
provide regulated water and wastewater utility ser vices, while CWSUS and HWSUS conduct the
Company’s non-regulated business, which includes providing billing, water quality testing, and
water and wastewater system operations and management services to cities and other companies.
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