California Water Service Group
Annual Report 2022

Plain-text annual report

California Water Service Group 2022 summary annual report Steady at the helm HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION 02 Steady at the helm 18 20 26 28 30 32 34 Business at a glance Letter to stockholders CWT 20-year total return on investment Eight-year financial review Retiring crew members Board of directors Corporate officers 36 Corporate information California Water Service Group (NYSE: CWT) is the third- largest publicly traded water utility in the United States, providing high-quality water and wastewater services to more than two million people through four regulated subsidiaries: California Water Service (Cal Water), Hawaii Water Service (Hawaii Water), New Mexico Water Service (New Mexico Water), and Washington Water Service (Washington Water). A fifth subsidiary, Texas Water Service, invests in water and wastewater infrastructure in Texas through a joint venture with BVRT Utility Holding Company. We are committed to improving the quality of life for our customers, communities, employees, and stockholders. We do this by living our core values and delivering on our promise to provide quality, service, and value. This report contains forward-looking statements that are based on currently available information, expectations, estimates, assumptions and projections, and management’s judgment about the Company, the water utility industry, and general economic conditions. Forward-looking statements, which are identified by words such as seek, expect, intend, plan, believe, anticipate, project, will, and forecast, are not guarantees of future performance, and actual results may vary materially. Please see our 2022 Annual Report on Form 10-K for more information. 1 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Established in 1926, our company has seen good times and bad. We rejoiced when America rebounded after the Great Depression, WWII ended, the Civil Rights Movement gained momentum, and the first man walked on the moon. We mourned when President John F. Kennedy and Dr. Martin Luther King Jr. were assassinated, astronauts were lost in the Challenger and Columbia disasters, terrorists took thousands of American lives on 9/11, and, most recently, the world suffered a heartbreaking global pandemic. Through it all, we have survived and thrived by focusing day in and day out on our mission: to provide the safe, reliable water supply that is the lifeblood of our communities, while also seizing every opportunity to enhance the quality of life for our customers, communities, employees, and stockholders. 2 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Staying the course Challenging times threaten to take us off course. To stay on track, we prioritize the things that are core to the business: water quality, public health and safety, customer service, and infrastructure investment. 3 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Keeping our promise to customers We promise to provide quality, service, and value to our customers, and in 2022, we delivered by: Answering 87.7% of customer calls within 20 seconds Rendering 99.8% of customer bills accurately Arriving within two hours of designated appointment times 98.6% of the time Helping customers save 180 million gallons of water through a variety of conservation programs We recognize that customer service goes beyond these performance metrics to the way we make our customers feel. That’s why we implemented an additional survey tool in 2022 that will help us keep a finger on their pulse and continue to identify ways to surpass their expectations. 250 water quality standards were met or surpassed to protect public health and safety. 4 Delivering safe, high-quality water Whatever is happening in the world around us, one thing never changes: our responsibility for providing safe water to our customers and communities. Our water quality assurance program is multi-faceted and rigorous, and our laboratory is at the heart of it. In 2022, our team participated in an intense audit, demonstrating expertise and conformance with regulatory methodologies and docu- mentation requirements. They earned recertification from the California Environmental Laboratory Accreditation Program (ELAP) and verified their conformance with stricter national standards. This allows for in-house analyses by scientists who are personally invested in our customers’ health and safety, which results in superior quality, faster service, and lower costs for our customers. 4 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION “ We couldn’t allow these supply chain disruptions to slow down our water system infrastructure improvement program, because our customers rely on us to make the investments necessary to provide a reliable, safe water supply. By putting our heads together and getting creative, we’ve been able to minimize the effects of delays.” — elissa ouyang, chief procurement officer Investing in our infrastructure Businesses in many industries faced supply chain challenges in 2022, and we were no exception. Faced with delays in shipments of water pipe, fittings, hydrants, valves, and other key materials, we formed cross- functional teams to address the issue. our strategy included: An accelerated ordering program to enable teams to accurately estimate needs and order materials earlier in the project design process A pre-purchase plan to allow for the advanced purchase and storage of commonly used supplies Identification and addition of new materials and suppliers to meet critical needs As a result of these efforts, we invested $328 million in infrastructure improvements that increase reliability and improve water quality. 5 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Throwing out a lifeline When our customers and community partners struggle to stay afloat, we are there to throw out a lifeline. We are more than a water utility company; we are a helping hand, securing financial assistance for customers, connecting people with available programs, and supporting community organizations. 6 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Executing a new grant strategy We use investments from our stockholders to fund critical infrastructure improvement projects, and these investments are vital to the reliability and integrity of our water systems. For certain projects, however, a state or federal grant can be used to augment stockholder investment and minimize the rate impact to customers. To take advantage of these opportunities, we developed a grant pursuit strategy. In 2022, we secured more than $10 million in grants to fund water pipes, water supply projects, and water quality treatment in disadvantaged communities. Helping customers take advantage of our programs We offer a range of programs to help customers who are having difficulties making ends meet. In addition to a Rate Support Fund for all customers in smaller, higher-cost areas, we offer a low-income assistance program, a stock- holder-funded hardship grant program, and a variety of water conservation programs. And when customers need more time to bring their accounts current, we offer inter- est-free payment plans. To help customers take advantage of these programs, as well as the services offered by some of our community partners, in 2022, we hosted customer resource fairs in several disadvantaged communities. 7 7 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Contributing to our communities Beyond our customer assistance programs, we contribute to community organizations that are working to make a difference in our communities. Here are just a few 2022 examples. We: Provided grants to firefighting agencies for essential equipment and tools Delivered meals and toys to needy families through our Operation Santa Claus event in King City Adopted goats for environmentally friendly landscaping in Palos Verdes Donated funds to the San Juan College Veteran Center In 2022, throughout our service areas, our stockholder-funded contributions totaled more than $1.58 million Supported Village Harvest’s Community Fruit Harvesting program, which organizes volunteer teams to pick one-quarter of a million pounds of fruit from local backyards and small orchards for food banks Contributed to support efforts for Ukraine and victims of Hurricane Ian “ One of the things I love most about our company is our commitment to doing the right thing. Our philanthropic giving is a meaningful and tangible demonstration of this commitment. We are purpose-driven, and we work together to make a real difference in our communities.” — shannon dean, chief citizenship officer 8 8 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION All hands on deck It takes all of us to keep things ship-shape. When we do all we can to take care of our employees, they do all they can to take care of our customers. And as any good captain knows, a crew that feels heard and valued will perform like a well-oiled machine, solving any problem that arises. 9 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Crews coming together to solve problems In good times and bad, our employees are dedicated to serving our customers. This dedication and teamwork was demonstrated perfectly by a team in our Bakersfield District, who came together and worked around the clock to prevent water service interruptions to customers after a wide- spread power outage occurred late one Friday night in November. After confirming that standby generators worked as intended and that water in the system was not adversely impacted, the team focused on the two massive water quality treatment plants serving the city. Within an hour of the power loss, the plants had been manually restarted and were operating properly. Work continued into the weekend as power was restored. Through it all, customers were blissfully unaware of all our team was doing behind the scenes to serve them. other crews getting the job done Challenge Solution A Christmas event in Salinas was jeopardized by water collecting from a heavy rain. Within minutes, two of our operators arrived to drain the water so the festivities could continue. A leak caused a system- wide outage in a remote area of Washington located nearly an hour from our Operations Center. In Oroville, the sedimen- tation basin in our treatment plant needed to be cleaned out in a single day, an impossible feat for the local team. The crew worked long hours through a snowy, icy holiday weekend to locate the leak in chal- lenging terrain and repair it so that no customers would be without water. Operations professionals from Chico and Willows joined forces with the Oroville team to get the job done. 10 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION “ Preparation is key in emergency response. An effective emergency response program involves partnering with first responders to regularly rehearse and simulate actual incidents to refine our information sharing, coordinated response, and public outreach protocols. This is a long-standing practice at the Company, and we are thankful for the support from our community leaders and partner agencies.” — michael luu, chief risk officer Getting everyone back on board The pandemic took away a lot of things, and one of them was the ability for our employees to connect. Isolated in our pods, faces covered with masks, we lost touch with each other and our communication suffered. For the first time ever, in one of our annual surveys, a significant number of employees said that we’d lost something special about our culture. This was a monumental concern to us, and we immediately set out on a listening campaign. We sought counsel from inside and out and took steps to re-engage and motivate our employees. RESULTS: Later in 2022, we were named a Great Place to Work® by the Great Place to Work Institute. Bringing first responders together In 2022, Cal Water organized a multi-agency emergency response exercise to coordinate how first responders would work together in a contaminated water scenario. The event, which took place in Chico, California, included both a field and tabletop exercise. Joining Cal Water were representatives from the California Department of Drinking Water, Federal Bureau of Investigation, City of Chico Police and Fire Departments, Butte County Office of Emergency Services, California Office of Emergency Services, and others. The massive undertaking enabled us to sharpen our emergency response procedures, test our customer notification system, and further strengthen our partnerships with other first responders. 11 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Eyes on the horizon What if the crew of the Titanic could have seen that massive iceberg out in the distance below the surface? Surely they would have circumvented disaster. A key part of our strategy is to keep our eyes on the horizon, identifying risks to the business and taking meaningful steps to mitigate them. A few that are currently in our sights: climate change, regulatory hurdles, and water supply constraints. 12 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Mitigating and adapting to climate change As part of our effort to reduce our contribution to climate change, we: Continued to promote our industry-leading water conservation programs Conducted a month-long educational campaign in our service areas to help customers understand that when they conserve water, they reduce the amount of power needed for water delivery, thus reducing greenhouse gas emissions Piloted multiple technologies for leak detection to minimize loss in our water systems Made progress on an energy management system that will enable us to prioritize use of the most energy- efficient sources and identify opportunities to replace and upgrade facilities for increased energy efficiency Completed a fleet study to identify optimal replacement cycles and opportunities to downsize vehicles In 2022, we continued to identify and mitigate risks associated with climate change. We: Cleared fire breaks around key facilities to minimize risk of wildfire damage Installed additional backup generators to enable us to operate during power interruptions Designed a floating intake to be utilized in Clear Lake to help meet water needs when lake levels are low in our Lucerne, California service area Developed and refined operational contingency plans for operating our surface water treatment plants when they are impacted by climate change-driven events, including fires, floods, and droughts Our Water Resource Sustainability, Engineering, Water Quality, Operations, and Fleet and Facilities Departments are all working on climate change-related projects to be submitted in California’s next rate filing. Thorough preparation for the filing is critical, as all projects must be reviewed and approved by our regulator during the triennial process. 13 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Advocating to protect affordability Looking at water supply reliability Although our customer assistance programs are helpful, affordability remains top of mind for us, as the costs of providing safe, reliable water service continue to increase for all water providers. Challenge Solution The California Public Utilities Commission’s 2020 decision to disallow the use of decoupling created a major regulatory hurdle for us in reaching both affordability and water conservation goals. In 2022, Cal Water led a coalition of diverse interests in supporting passage of legislation in California that restores water utilities’ ability to propose decoupling in future proceedings before the Commission. Decoupling removes the link between a water utility’s financial performance and the amount of water it sells. Without it, a water utility must collect more of the revenue required for operations in the fixed monthly service charge, which hurts low-income, low-volume water users. Every investor has heard the saying, “Don’t put all your eggs in one basket.” Diversification is also key in water supply planning. We have been taking a hard look at each of our service areas to prioritize opportunities to augment existing sources of supply, an endeavor that becomes increasingly important in the face of climate change. In 2022, we installed water quality treatment and an emergency generator at a high-volume well serving East Los Angeles, California. The project adds a water source and reduces the cost of bringing water in from outside the service area by more than $5,000 per day, a savings that is passed directly on to customers. We also secured grants for two critical water supply projects in our Visalia and Kern River Valley Districts. In Visalia, we plan to add a water storage tank and two booster pumps to augment one small system’s single well; in Kern River Valley, we plan to construct an in-channel concrete intake structure and associated equipment to improve our ability to draw water from the Kern River. 14 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Full steam ahead A famous fish once said, “Just keep swimming,” and that’s precisely our approach. We keep executing our plan, making progress, and moving forward. For us, growth takes various forms, including connecting to communities that lack a reliable supply of safe water, adding new service areas, and pursuing new partnerships. 15 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION “ We believe that every community should have access to clean, safe water. That’s a personal passion of mine. So I’m particularly proud of our tenacious efforts to bring people together to connect communities in need to our water systems, despite the challenges involved.” — sophie james, chief water quality officer Connecting to communities in need Shocking though it may be, an estimated 2 million people in the United States lack access to clean, safe water. We are working hard to make a difference in neighboring communities that find themselves in this untenable situation, whether due to a decline in available water supplies or insurmountable water quality challenges. In one dramatic example from 2022, we expedited a project to connect a community in Southwest Bakersfield to our system after the well serving its mobile home park ran dry in triple-digit heat, leaving dozens of residents no alternative but to scoop water from the complex’s swimming pool to flush their toilets. Although these projects often require cooperation between multiple parties and can be challenging and complex, we won’t give up. In fact, at the end of 2022, we had 12 consolidation projects in various stages of progress, from early initiation to pending grant approval. 1,000+ is the number of customers we are currently working to connect to our systems. This includes one school. 16 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Bringing in new customers growth by acquisition continued apace in 2022 We closed acquisitions in Hawaii, New Mexico, Texas, and Washington, adding a total of 4,016 customers. We secured regulatory approval on four acquisitions in California, Hawaii, and Washington, which is expected to add 2,900 customers upon closing. We completed purchase agreements with three utilities serving 980 customers in Hawaii, New Mexico, and Washington. Entering into new partnerships two unique water supply partnerships in 2022 One of the subsidiaries of our Texas partner, BVRT Utility Holding Company, entered into a long-term water supply agreement with the Guadalupe Blanco River Authority. Under the terms of the agreement, this subsidiary plans to invest more than $40 million in capital in the first phase of a water supply pipeline project and receive up to 2,419 acre-feet of water annually in return. Cal Water entered into a partnership with biotech leader Genentech to explore the feasibility of constructing facilities to bring recycled water to Genentech’s South San Francisco campus. If the project is built, it will improve supply reliability in the area and demonstrate both companies’ commitment to sustainability. 17 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Our business at a glance Our mission: to be the leading provider of water and wastewater services Our purpose: to enhance the quality of life for our customers, communities, employees, and stockholders Our operating imperatives: affordable and excellent service, sustainability and community impact, public health and safety, enhanced stockholder value, and employees as best advocates 2M+ population served through 553,000 service connections 100B+ gallons of drinking water delivered annually 650M+ gallons of wastewater processed annually 18 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION founded in 1926 1,200 employees serving 150+ communities service connections by state CA California 496,400 WA Washington 37,500 NM New Mexico 10,700 HI Hawaii 6,200 TX Texas 2,200 19 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION To our stockholders It’s worth pointing out that our theme for 2022 is “Steady at the Helm,” which is distinctly different from “A Port in the Storm.” We are not insulated from headwinds caused by inflation, supply chain issues, workforce challenges, or, most impactful, regulatory delays. Our 2022 financial results reflect some of these challenges. However, for nearly a century, we have demonstrated that we are steady at the helm, in both smooth and rough waters. That’s because we remain focused on our mission and our customers, no matter what comes our way. 20 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION our 2022 highlights Previous pages in this report illustrate why stockholders tend to ride out the waves with us. To recap and add to the accomplishments highlighted there, we: Declared our 308th consecutive quarterly dividend and increased the annual dividend for the 55th consecutive year Met or surpassed every primary state and federal water quality standard for public health and safety in all 291 of our water systems Completed an inventory of our water service lines to rule out the presence of lead, and began the multi-phase process of inventorying service lines owned by customers Constructed two treatment plants for Per- and Polyfluorinated Substances, commonly known as PFAS Provided unconscious bias training to 95% of our employees Invested more than $6.1 million in conservation rebates and programs for customers Secured more than $10 million in grants to minimize rate impacts of critical water supply projects in disadvantaged communities Added 4,016 new customers through acquisitions, secured regulatory approval to add 2,900 customers in 2023, and completed purchase agreements that are expected to add 980 customers upon closing Treated more than 664 million gallons of wastewater safely and with no negative environmental impacts Made $1.58 million in stockholder-funded contributions to our communities through a range of philanthropic programs Invested $328 million in critical infrastructure that improves quality and reliability for customers, including: > 18 projects to better prepare us for power interruptions and wildfire events, including emergency generators > Seven projects to replace, upgrade, and/or retrofit storage and pressure tanks > 12 projects to enhance water quality treatment > 134,072 feet of water pipeline Challenged the California Public Utilities Commission’s decision to disallow decoupling, a critical regulatory mechanism in preparing for climate change and drought, in the California State Supreme Court Made steady progress on our ESG journey, described in detail in our annual ESG Report, which will be available at calwatergroup.com in May 2023 21 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION What keeps our stockholders on board? our transparency & track record our purpose First, our earnings drivers are straightforward: grow the business (primarily through infrastructure investment and secondarily through acquisitions); manage controllable expenses; and provide safe, reliable service to customers. And we’ve delivered, even when faced with regulatory delays. Having successfully invested nearly $1.5 billion and added 35,500 customers over the past five years, we have demonstrated that we are on course from a growth perspective. We’ve also been disciplined in managing controllable expenses and have remained focused on the importance of affordability and excellent service for customers. A recent example is our effort to regionalize our customer service teams and expand our service hours, which increased efficiency and enhanced service. And, although they are beyond our control, regulatory delays are eventually resolved. All of this is transparent to investors from Wall Street to Main Street. Second, and more important: We have a higher purpose. Our stockholders know that they are making it possible for our dedicated team of employees to provide a service that is absolutely essential to the health, well-being, and prosperity of every family and business that relies on us. As climate change continues to impact everything from water supply reliability to water quality, our communities know the importance of having a professional, proven water provider to meet their needs. Our genuine commitment to enhancing the quality of life for those we serve, through our daily operations, community contributions, and preparations for the future, make us an asset to our customers, communities, and stockholders. 22 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Annual dividend per common share $0.750 $0.790 $0.850 $0.920 $1.000 2018 2019 2020 2021 2022 Capital investment in infrastructure $272M $274M $299M $293M $328M 2018 2019 2020 2021 2022 23 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION what’s on the horizon Looking ahead to 2023 and beyond, we expect to continue to make steady progress forward. We anticipate the California Public Utilities Commission will authorize rate changes requested in our 2021 filing, which will enable us to continue to invest for the future while improving service and efficiency today. We will work diligently to prepare for our 2024 filing, which will reflect the need for investment to adapt to and mitigate climate change impacts, including water supply challenges. We expect our growth to continue, as we diligently invest in our infrastructure and pursue opportunities to serve new communities. Already, in the first quarter of 2023, we reached an agreement to purchase Lake Section Water Company in Chaparral, New Mexico, which serves 5,000 customer connections. And, most importantly, we will maintain our focus on people — we will bring our employees together and keep them engaged in fulfilling our mission; we will give to worth- while charitable organizations; and we will pursue grants and financial assistance to help our customers. Thomas A. Scanlon, our Corporate Controller & Principal Accounting Officer; and Justin B. Skarb, our Vice Presi- dent, Government & Community Affairs. We also con- gratulate and thank Scott L. Morris, who has assumed the role of Lead Independent Director while Terry P. Bayer is on medical leave. Our proxy details the wide range of expertise and experience possessed by both our Board and our Officer team; we hope you’ll take a moment to review their impressive resumés. With that, we wish you health, happiness, and prosperity in 2023 and thank you for your investment in California Water Service Group. martin a. kropelnicki President & Chief Executive Officer A dedicated and top-notch crew is on board to navigate us forward, including the newest additions to our officer team: Shawn C. Bunting, our new Vice President, General Counsel; peter c. nelson Chairman of the Board 24 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Financial Highlights* Dollars in thousands, except per common share data “ I am truly blessed to be part of our ‘One Team’ workplace. This is an extraordinary company, solid in both good and tough times.” — pete nelson, chairman year ended december 31 2022 2021 2020 2019 2018 Market price at year end $60.64 $71.86 $54.03 $51.56 $47.66 Book value per share $23.70 $21.72 $18.08 $15.84 $15.19 Earnings per share (diluted) Dividend per share $1.77 $1.00 $1.96 $0.92 $1.97 $1.31 $1.36 $0.850 $0.790 $0.750 Operating revenue $846,431 $790,909 $794,307 $714,557 $698,196 Net income attributable to California Water Service Group $96,011 $101,125 $96,831 $63,116 $65,584 *Certain numbers reflect prior period adjustments. See Form 10-K for details. 25 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION CWT 20-year total return on investment On $100 stock purchase on January 1, 2003, with dividends reinvested S&P 500 CWT $1,019 $891 $770 $746 $695 $626 $593 $586 $624 $507 $439 $403 $383 $100 $100 $124 $120 $165 $137 $147 $179 $168 $190 $175 $182 $234 $115 $194 $143 $204 $205 $164 $168 $304 $289 $289 $294 $331 $268 $252 $217 $197 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 steady at the helm 2022 annual report 26 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION CWT 20-year total return on investment On $100 stock purchase on January 1, 2003, with dividends reinvested $1,019 $891 $770 $746 $695 S&P 500 CWT $626 $593 $586 $624 $507 $439 $403 $383 $304 $289 $289 $294 $331 $268 $252 $217 $197 $165 $137 $147 $179 $168 $190 $175 $182 $194 $143 $204 $205 $164 $168 $234 $115 $100 $100 $124 $120 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 steady at the helm 2022 annual report 27 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Eight-year financial review* Dollars in thousands, except per common share data and as otherwise noted summary of operations Operating revenue Operating expenses Interest expense, other income and expenses, net Net income common share data Earnings per share (diluted) Dividend declared Dividend payout ratio Book value Market price at year end Common shares outstanding at year end (in thousands) Return on average common stockholders’ equity Long-term debt interest coverage balance sheet data Net utility plant Total assets Long-term debt, including current portion Capitalization ratios: Common stockholders’ equity Long-term debt other data Water production (in million gallons) Customers at year end, including Hawthorne and Commerce New customers added Operating revenue per customer Utility plant per customer Employees at year end 2022 $846,431 $718,771 $32,397 $96,011 $1.77 $1.00 57% $23.70 $60.64 55,598 7.7% 3.31 $3,058,870 $3,850,752 $1,055,797 55.6% 44.4% 106,945 553,000 5,400 $1,531 $8,203 1,225 * Certain numbers reflect prior period adjustments. See Form 10-K for details. 28 28 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION 2021 $790,909 $664,139 $25,791 $101,125 $1.96 $0.920 47% $21.72 $71.86 53,716 9.7% 3.52 2020 $794,307 $657,641 $39,835 $96,831 $1.97 $0.850 43% $18.08 $54.03 50,334 11.5% 3.87 2019 $714,557 $615,145 $36,296 $63,116 $1.31 $0.790 60% $15.84 $51.56 48,532 8.4% 3.10 2018 $698,196 $587,656 $44,956 $65,584 $1.36 $0.750 55% $15.19 $47.66 48,065 9.2% 3.57 2017 $676,113 $569,030 $34,143 $72,940 $1.52 $0.720 47% $14.56 $45.35 48,012 10.7% 4.58 2016 $609,370 $526,734 $33,961 $48,675 $1.01 $0.690 68% $13.75 $33.90 47,965 7.5% 3.45 2015 $588,368 $506,803 $36,548 $45,017 $0.94 $0.670 71% $13.41 $23.27 47,875 7.1% 3.67 $2,846,862 $3,623,271 $1,060,986 $2,650,558 $3,394,248 $786,227 $2,406,370 $3,111,308 $808,622 $2,232,723 $2,837,704 $814,938 $2,047,965 $2,744,710 $531,713 $1,859,277 $2,411,745 $557,953 $1,701,768 $2,241,253 $514,045 52.5% 47.5% 110,519 547,600 4,600 $1,444 $7,665 1,182 53.7% 46.3% 110,742 543,000 22,400 $1,463 $7,165 1,192 49.4% 50.6% 104,735 520,600 3,100 $1,373 $6,820 1,207 47.3% 52.7% 107,589 517,500 3,200 $1,349 $6,240 1,184 56.8% 43.2% 104,986 514,300 2,800 $1,315 $5,775 1,176 54.2% 45.8% 99,096 511,500 2,500 $1,191 $5,312 1,163 55.5% 44.5% 98,899 509,000 2,900 $1,156 $4,925 1,155 29 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Fair winds and following seas our people, our company It’s the people who make our company special, and many of them choose to enjoy long careers with us before embarking on their retirement journeys. officers & directors retiring in 2022 & 2023 David B. Healey, Vice President & Corporate Controller, retired in December 2022 after 13 years of service. Lynne P. McGhee, Vice President, Legal Counsel, retired in March 2023 after 19 years of service. Paul G. Townsley, Vice President, Corporate Development, will retire in May 2023 after 10 years of service. Peter C. Nelson, Chairman of the Board, will retire in May 2023, after 27 years of service. He began his career as President & Chief Executive Officer in 1996. He has served as Chairman of the Board since 2012. Lisa Peralta Senior Engineering Assistant 34 years of service Charles (Richard) Schuppe Risk Manager 41 years of service Steven Cavallini General Superintendent 34 years of service Stanley Ellis Water Quality Technician 28 years of service Joel Huntington Foreman Construction & Operations 40 years of service Curtis Reynolds Regional Foreman Flushing & Valve Maintenance 39 years of service team members retiring in 2022 with more than 25 years of service Emma Martinez Senior Clerk 30 years of service Gary Vincelet Interim Local Manager 32 years of service Russell Chisam Distribution Service Technician 26 years of service Richard Velasquez Regional Foreman Construction & Operations 35 years of service Alejandro Portillo Certified Pump Operator 34 years of service Scott Moore Foreman, Pump & Control Valves 35 years of service Annabelle Bungubung Senior Control Clerk 38 years of service Pascal Ansolabehere Distribution Service Technician 30 years of service Kathleen Hoffman Regional Customer Center Service Manager 32 years of service Philip Delgado Superintendent 30 years of service Ricky Shepard Superintendent 26 years of service Regina Carter Administrative Assistant 35 years of service Wayne Lechich Superintendent 30 years of service Laura John Operations Clerk 36 years of service Mark Markham Certified Pump Operator 43 years of service 30 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION “ In their own unique ways, these people have made a mark on this company and leave a legacy that won’t be forgotten. It is with deepest thanks and utmost respect that I wish them the best and assure them we will carry on fulfilling our shared mission and making a positive impact.” — marty kropelnicki, president & chief executive officer 31 steady at the helm 2022 annual reportHOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION s r o t c e r i d f o d r a o B Terry P. Bayer Former Chief Operating Officer, Molina Healthcare Inc. Director since 2014. On medical leave. Martin A. Kropelnicki President and Chief Executive Officer of California Water Service Group Director since 2013. Gregory E. Aliff Former Vice Chairman and Senior Partner of U.S. Energy & Resources, Deloitte LLP Director since 2015. Chair of the Audit Committee. Member of the Finance and Capital Investment Committee and Enterprise Risk Management, Safety, and Security Committee. Shelly M. Esque Former Vice President and Global Director of Corporate Affairs, Intel Corporation Director since 2018. Member of the Enterprise Risk Management, Safety, and Security Committee and Nominating and Corporate Governance Committee. Thomas M. Krummel, M.D. Emile Homan and Chair Emeritus, Department of Surgery, Stanford University School of Medicine Director since 2010. Chair of the Organization and Compensation Committee. Member of the Nominating and Corporate Governance Committee. steady at the helm 2022 annual report 32 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION s r o t c e r i d f o d r a o B Yvonne A. Maldonado, M.D. Professor of Global Health and Infectious Diseases, Departments of Pediatrics and Epidemiology and Population Health, Stanford University Director since 2021. Member of the Enterprise Risk Management, Safety, and Security Committee and Nominating and Corporate Governance Committee. Peter C. Nelson Chairman of the Board of California Water Service Group Director since 1996 Lester A. Snow Former Director of the California Department of Water Resources Director since 2011. Chair of the Enterprise Risk Management, Safety, and Security Committee. Member of the Finance and Capital Investment Committee and Organization and Compensation Committee. Scott L. Morris Chairman, Avista Corporation Director since 2019. Lead Independent Director, Chair of the Nominating/Corporate Governance Committee. Member of the Audit Committee and Organization and Compensation Committee. Carol M. Pottenger Principal and Owner of CMP Global, LLC, and Retired U.S. Navy Vice Admiral Director since 2017. Member of the Enterprise Risk Management, Safety, and Security Committee, Finance and Capital Investment Committee, and Nominating/ Corporate Governance Committee. Patricia K. Wagner Former Group President, U.S. Utilities, Sempra Energy Director since 2019. Chair of the Finance and Capital Investment Committee. Member of the Audit Committee. 33 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION s r e c ffi o e t a r o p r o C Sophie M. James Chief Water Quality Officer Shannon C. Dean Vice President, Customer Service & Chief Citizenship Officer David B. Healey Vice President & Corporate Controller Robert J. Kuta Vice President, Engineering & Chief Water Quality and Environmental Compliance Officer Kenneth G. Jenkins Chief Water Resource Sustainability Officer Martin A. Kropelnicki President & Chief Executive Officer Michael B. Luu Vice President, Information Technology & Chief Risk Officer Michael S. Mares Vice President, Operations 34 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION s r e c ffi o e t a r o p r o C Lynne P. McGhee Vice President, General Counsel Greg A. Milleman Vice President, Rates and Regulatory Affairs Michelle R. Mortensen Vice President, Corporate Secretary & Chief of Staff Daryl L. Osby Vice President, Emergency Preparedness, Safety, and Security Elissa Y. Ouyang Vice President, Procurement and Facilities Todd K. Peters Chief Engineering Officer Thomas F. Smegal, III Vice President, Chief Financial Officer & Treasurer Paul G. Townsley Vice President, Corporate Development Ronald D. Webb Vice President, Chief Human Resource Officer 35 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION Corporate information anticipated dividend dates for 2023 to transfer stock QUARTER DECLARATION RECORD DATE PAYMENT DATE First January 25 February 6 February 17 Second April 26 May 8 May 19 Third July 26 August 7 August 18 Fourth October 25 November 6 November 17 annual meeting bond registrar The Annual Meeting of Stockholders will be held online on Wednesday, May 31, 2023, at 9:30 a.m. PT. Details of the business to be transacted during the meeting will be contained in the proxy material, which will be mailed to stockholders on or about April 19, 2023. computershare investor services 462 South 4th Street, Suite 1600 Louisville, Kentucky 40202 U.S. Bank Trust, N.A. One California Street San Francisco, California 94111 415.273.4580 executive office and stockholder information California Water Service Group Attn: Stockholder Relations 1720 North First Street San Jose, California 95112 408.367.8200 or 800.750.8200 www.calwatergroup.com 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 com- plete 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, stockbrokers, savings and loan associations, and credit unions with membership in approved signature medallion programs) pursuant to SEC Rule 17Ad-15. A notary’s acknowledgment is not acceptable. This certificate should then be sent to Computershare Investor Services (Computershare) 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 Computershare. annual report for 2022 on form 10-k A copy of the Company’s annual report for 2022 filed with the Securities and Exchange Commission (SEC) on Form 10-K is available and can be obtained by any stockholder at no charge upon written request to the Company. The Company’s filings with the SEC can be viewed via the link to the SEC’s EDGAR system on the Company’s website. 36 steady at the helm 2022 annual report HOME BUSINESS AT-A-GLANCE STOCKHOLDER INFORMATION FINANCIAL REVIEW DIRECTORS & OFFICERS CORPORATE INFORMATION 1720 North First Street, San Jose, California 95112-4508 Phone: 408.367.8200 | www.calwatergroup.com | NYSE: CWT 37 steady at the helm 2022 annual report

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