Exhibit 4.25
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                        CALIFORNIA WATER SERVICE COMPANY



                      ELEVENTH SUPPLEMENT TO NOTE AGREEMENT


                          Dated as of November 3, 2003


         Re:         $20,000,000 5.52% Series M Senior Notes
                              Due November 1, 2013



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                      ELEVENTH SUPPLEMENT TO NOTE AGREEMENT


                                                                     Dated as of
                                                                November 3, 2003

To the Purchasers named in
Schedule A hereto


Ladies and Gentlemen:

         This  Eleventh  Supplement to Note Purchase  Agreement  (the  "Eleventh
Supplement") is between  California  Water Service Company (the "Company") whose
address  is  1720  North  First  Street,  San  Jose,  California  95112  and the
institutional investors named on Schedule A attached hereto (the "Purchasers").

         Reference  is hereby made to that certain  Note  Agreement  dated as of
March 1, 1999 (the "Note  Agreement")  between the  Company  and the  purchasers
listed on Schedule I thereto. All capitalized terms not otherwise defined herein
shall have the same  meaning as specified  in the Note  Agreement.  Reference is
further made to Section 4.3 thereof which requires  that,  prior to the delivery
of any Additional Notes, the Company and each Additional Purchaser shall execute
and deliver a Supplement.

         The  Company  hereby  agrees  with each  Purchaser  named on Schedule A
hereto as follows:

         1. The  Company  has  authorized  the  issue  and  sale of  $20,000,000
aggregate  principal  amount of its 5.52%  Series M Senior Notes due November 1,
2013 (the  "Series M  Notes").  The Series M Notes,  together  with the Series B
Notes initially issued pursuant to the Note Agreement, the Series C Notes issued
pursuant to the First  Supplement to Note Agreement dated as of October 1, 2000,
the Series D Notes issued  pursuant to the Second  Supplement to Note  Agreement
dated as of September 1, 2001,  the Series E Notes issued  pursuant to the Third
Supplement to Note Agreement  dated as of May 1, 2002, the Series F Notes issued
pursuant to the Fourth Supplement to Note Agreement dated as of August 15, 2002,
the Series G Notes issued  pursuant to the Fifth  Supplement  to Note  Agreement
dated as of November 1, 2002,  the Series H Notes  issued  pursuant to the Sixth
Supplement to Note  Agreement  dated as of December 1, 2002,  the Series I Notes
issued  pursuant to the Seventh  Supplement to Note Agreement dated as of May 1,
2003,  the Series J Notes  issued  pursuant to the Amended and  Restated  Eighth
Supplement to Note Agreement  dated as of May 1, 2003, the Series K Notes issued
pursuant to the Ninth  Supplement  to Note  Agreement  dated as of February  15,
2003,  the  Series L Notes  issued  pursuant  to the  Tenth  Supplement  to Note
Agreement  dated as of February 15, 2003, the Series N Notes issued  pursuant to
the Twelfth  Supplement to Note Agreement  dated as of October 24, 2003 and each
Series of Additional Notes which may from time to time be issued pursuant to the
provisions of Section 1.4 of the Note Agreement, are collectively referred to as
the "Notes" (such term shall also include any such notes issued in


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substitution therefor pursuant to Section 9.2 of the Note Agreement). The Series
M Notes shall be substantially in the form set out in Exhibit 1 hereto with such
changes therefrom, if any, as may be approved by the Purchasers and the Company.

         2. Subject to the terms and  conditions  hereof and as set forth in the
Note  Agreement  and  on  the  basis  of  the   representations  and  warranties
hereinafter  set forth,  the Company agrees to issue and sell to the Purchasers,
and each  Purchaser  agrees to purchase from the Company,  Series M Notes in the
principal  amount set forth opposite such  Purchaser's name on Schedule A hereto
at a price of 100% of the principal amount thereof on the closing date hereafter
mentioned.

         3. Delivery of the  $20,000,000  in aggregate  principal  amount of the
Series M Notes will be made at the offices of Chapman  and Cutler LLP,  111 West
Monroe Street, Chicago,  Illinois 60603-4080 against payment therefor in Federal
Reserve or other funds current and immediately available at the principal office
of Bank of America,  ABA No. 121000358,  Account No. 14879-00161,  Account Name:
California  Water Service Company  Security Sales, in the amount of the purchase
price at 11:00 A.M., San Francisco, California time, on November 3, 2003 or such
later date (not later than  November 10, 2003) as shall  mutually be agreed upon
by the Company and the Purchasers of the Series M Notes (the "Closing Date").

         4. Prepayment of Notes.

         (a) Required  Prepayments.  No prepayments are required to be made with
respect to the Series M Notes prior to the expressed maturity date thereof other
than  prepayments  made in connection with an acceleration of the Series M Notes
pursuant to the provisions of Section 6.3 of the Note Agreement.

         (b) Optional Prepayment with Premium. Upon compliance with Section 4(d)
below the Company shall have the  privilege,  at any time and from time to time,
of prepaying  the  outstanding  Notes of any Series,  either in whole or in part
(but if in part then in a minimum  principal  amount of  $100,000) by payment of
the  principal  amount of the Notes of such  Series,  or  portion  thereof to be
prepaid,  and accrued interest thereon to the date of such prepayment,  together
with a premium equal to the  Make-Whole  Amount,  determined as of five Business
Days prior to the date of such prepayment pursuant to this Section 4(b).

         (c) Optional  Prepayment  at Par in the Event of  Condemnation.  In the
event a Material  Condemnation  shall have occurred with respect to any property
of the Company or a Restricted  Subsidiary,  then upon  compliance  with Section
4(d) below the Company  shall have the privilege of applying the proceeds of any
condemnation award received in connection with such Material Condemnation to the
prepayment of the principal amount of the Notes of any Series then  outstanding,
or any portion  thereof to the extent of such  proceeds,  together  with accrued
interest  thereon to the date of such prepayment.  Any optional  prepayment made
pursuant to this Section 4(c) shall be without premium.

         (d) Notice of Optional Prepayments. The Company will give notice of any
prepayment of the Notes pursuant to Section 4(b) or 4(c) to each Holder of Notes
to be prepaid  not less than 30 days nor more than 60 days before the date fixed
for such optional  prepayment  specifying


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(a) such date,  (b) the  Section of this  Eleventh  Supplement  under  which the
prepayment is to be made,  (c) the principal  amount of the Holder's Notes to be
prepaid on such date,  (d) whether a premium  may be payable,  (e) the date when
the premium,  if any, will be calculated,  (f) the estimated  premium,  together
with a reasonably  detailed  computation of such estimated premium,  and (g) the
accrued interest  applicable to the prepayment.  Such notice of prepayment shall
also  certify all facts,  if any,  which are  conditions  precedent  to any such
prepayment.  Notice of prepayment having been so given, the aggregate  principal
amount  of the Notes to be  prepaid  specified  in such  notice,  together  with
accrued interest  thereon and the premium,  if any, payable with respect thereto
shall become due and payable on the  prepayment  date  specified in said notice.
Not later than two Business Days prior to the prepayment  date specified in such
notice,  the Company shall  provide each Holder of a Note to be prepaid  written
notice of the premium,  if any,  payable in connection with such prepayment and,
whether or not any premium is payable, a reasonably detailed  computation of the
Make-Whole Amount.

         (e) Application of Prepayments.  In the case of each partial prepayment
of the Notes  pursuant to the  provisions of Section 4(b) or 4(c), the principal
amount of the Notes of the Series to be prepaid shall be allocated  among all of
the Notes of such Series at the time  outstanding  in  proportion,  as nearly as
practicable, to the respective unpaid principal amounts thereof.

         (f) Direct Payment.  Notwithstanding anything to the contrary contained
in the Note Agreement, this Eleventh Supplement or the Notes, in the case of any
Note owned by any Holder that is a Purchaser,  Additional Purchaser or any other
Institutional  Holder which has given written  notice to the Company  requesting
that  the  provisions  of this  Section  4(f)  shall  apply,  the  Company  will
punctually pay when due the principal thereof,  interest thereon and premium, if
any,  due with  respect to said  principal,  without  any  presentment  thereof,
directly to such Holder at its address set forth herein or such other address as
such Holder may from time to time  designate  in writing to the Company or, if a
bank account with a United  States bank is so  designated  for such Holder,  the
Company  will make such  payments in  immediately  available  funds to such bank
account,  marked for attention as indicated,  or in such other manner or to such
other  account in any United  States  bank as such  Holder may from time to time
direct in writing.

         (g) Make Whole Amount. The term "Make-Whole Amount" means, with respect
to any Series M Note, an amount equal to the excess,  if any, of the  Discounted
Value of the Remaining  Scheduled  Payments with respect to the Called Principal
of such  Note  over the  amount  of such  Called  Principal,  provided  that the
Make-Whole  Amount  may in no event  be less  than  zero.  For the  purposes  of
determining  the  Make-Whole  Amount,  the  following  terms have the  following
meanings:

                  "Called  Principal"  means, with respect to any Series M Note,
         the  principal  of such Note that is to be prepaid  pursuant to Section
         4(b) or has become or is  declared  to be  immediately  due and payable
         pursuant to Section 6.3 of the Note Agreement, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Series M Note, the amount  obtained by discounting all Remaining
         Scheduled  Payments  with respect to such Called  Principal  from their
         respective  scheduled due dates to the


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         Settlement  Date with respect to such Called  Principal,  in accordance
         with accepted  financial  practice and at a discount factor (applied on
         the same periodic basis as that on which interest on the Series M Notes
         is payable) equal to the Reinvestment Yield with respect to such Called
         Principal.

                  "Reinvestment   Yield"  means,  with  respect  to  the  Called
         Principal  of any  Series M Note,  0.50%,  plus the  yield to  maturity
         implied by (i) the  yields  reported,  as of 10:00 A.M.  (New York City
         time) on the fifth  Business Day  preceding  the  Settlement  Date with
         respect to such Called Principal,  on the display page of the Bloomberg
         Financial Markets Services Screen PX1 or the equivalent screen provided
         by Bloomberg  Financial  Markets  Commodities  News for actively traded
         U.S.  Treasury  securities  having a  maturity  equal to the  Remaining
         Average Life of such Called  Principal as of such  Settlement  Date, or
         (ii) if such  yields  are not  reported  as of such time or the  yields
         reported as of such time are not  ascertainable,  the Treasury Constant
         Maturity  Series  Yields  reported,  for the  latest day for which such
         yields have been so reported as of the second  Business  Day  preceding
         the Settlement Date with respect to such Called  Principal,  in Federal
         Reserve  Statistical  Release H.15 (519) (or any  comparable  successor
         publication)  for actively  traded U.S.  Treasury  securities  having a
         constant  maturity  equal to the Remaining  Average Life of such Called
         Principal  as of such  Settlement  Date.  Such  implied  yield  will be
         determined,   if  necessary,  by  (a)  converting  U.S.  Treasury  bill
         quotations  to  bond-equivalent  yields  in  accordance  with  accepted
         financial  practice  and (b)  interpolating  linearly  between  (1) the
         actively traded U.S. Treasury security with the maturity closest to and
         greater than the  Remaining  Average  Life and (2) the actively  traded
         U.S.  Treasury  security with the maturity closest to and less than the
         Remaining Average Life.

                  "Remaining  Average  Life"  means,  with respect to any Called
         Principal,  the number of years (calculated to the nearest  one-twelfth
         year) obtained by dividing (i) such Called  Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal  component of
         each Remaining  Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will  elapse  between  the  Settlement  Date with  respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining  Scheduled  Payments"  means,  with  respect to the
         Called  Principal  of any Series M Note,  all  payments  of such Called
         Principal and interest  thereon that would be due after the  Settlement
         Date with respect to such Called Principal if no payment of such Called
         Principal  were made prior to its scheduled due date,  provided that if
         such Settlement  Date is not a date on which interest  payments are due
         to be made  under the terms of the  Series M Notes,  then the amount of
         the next succeeding  scheduled  interest payment will be reduced by the
         amount of interest  accrued to such  Settlement Date and required to be
         paid on such Settlement Date pursuant to Section 4(b) hereof or Section
         6.3 of the Note Agreement.

                  "Settlement  Date" means, with respect to the Called Principal
         of any Series M Note, the date on which such Called  Principal is to be
         prepaid pursuant to Section 4(b)


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         hereof or has become or is declared to be  immediately  due and payable
         pursuant to Section 6.3 of the Note Agreement, as the context requires.

         5. Closing Conditions.

         (a) Conditions. The obligation of each Purchaser to purchase the Series
M Notes on the Closing Date shall be subject to the  performance  by the Company
of its agreements  hereunder which by the terms hereof are to be performed at or
prior to the time of delivery of the Series M Notes and to the following further
conditions precedent:

                  (i) Closing Certificate.  Such Purchaser shall have received a
         certificate  dated the Closing Date,  signed by the President or a Vice
         President  of the  Company,  the truth and accuracy of which shall be a
         condition to such Purchaser's obligation to purchase the Series M Notes
         proposed  to be sold to such  Purchaser  and to the effect that (1) the
         representations  and  warranties  of the Company set forth in Exhibit 2
         hereto are true and correct on and with  respect to the  Closing  Date,
         (2) the Company has performed all of its  obligations  hereunder  which
         are to be performed on or prior to the Closing Date, and (3) no Default
         or Event of Default has occurred and is continuing.

                  (ii)  Compliance   Certificate.   Such  Purchaser  shall  have
         received a  certificate  dated the Closing  Date,  signed by the Senior
         Financial Officer of the Company stating that such officer has reviewed
         the provisions of the Note  Agreement and this Eleventh  Supplement and
         setting forth the information  and  computation (in sufficient  detail)
         required in order to  establish  whether  the Company is in  compliance
         with Section 5.6 of the Note Agreement on the Closing Date.

                  (iii) Legal Opinions.  Such Purchaser shall have received from
         Bingham McCutchen LLP, counsel for the Company,  and Chapman and Cutler
         LLP,  special  counsel for the  Purchasers,  their  opinions  dated the
         Closing Date, in form and substance  satisfactory  to such  Purchasers,
         and  covering  the matters set forth  respectively  in Exhibits 3 and 4
         hereto.

                  (iv) Regulatory Approval. Prior to the Closing Date, the issue
         and sale of the  Series M Notes  shall  have  been duly  authorized  or
         approved by appropriate order of the Public Utilities Commission of the
         State of California (the  "Commission").  Such order shall be final and
         in full  force and  effect  and not  subject  to any  appeal,  hearing,
         rehearing or contest.  All conditions contained in any such order which
         are to be  fulfilled  on or prior to the issuance of the Series M Notes
         shall have been  fulfilled.  The Company  shall have  delivered  to the
         Purchasers and their special counsel a certified copy of such order and
         the application therefor.

                  (v) Related  Transactions.  The Company shall have consummated
         the sale of the entire principal amount of the Series M Notes scheduled
         to be sold on the Closing Date pursuant to this Eleventh Supplement.


<PAGE>

                  (vi)  Satisfactory  Proceedings.   All  proceedings  taken  in
         connection  with  the   transactions   contemplated  by  this  Eleventh
         Supplement,  and all documents  necessary to the consummation  thereof,
         shall be  satisfactory in form and substance to such Purchaser and such
         Purchaser's  special counsel,  and such Purchaser shall have received a
         copy  (executed  or  certified  as may  be  appropriate)  of all  legal
         documents or proceedings  taken in connection with the  consummation of
         said transactions.

                  (vii)  Purchase  Permitted By  Applicable  Law. On the Closing
         Date, the purchase of Series M Notes shall (a) be permitted by the laws
         and regulations of each jurisdiction to which any Purchaser is subject,
         without recourse to provisions  (such as Section  1405(a)(8) of the New
         York  Insurance  Law)  permitting  limited   investments  by  insurance
         companies  without  restriction  as to the character of the  particular
         investment,   (b)  not  violate  any   applicable   law  or  regulation
         (including,  without  limitation,  Regulation U, T or X of the Board of
         Governors  of the  Federal  Reserve  System)  and (c) not  subject  any
         Purchaser  to any tax,  penalty or  liability  under or pursuant to any
         applicable law or regulation, which law or regulation was not in effect
         on the date hereof. If requested by any Purchaser, such Purchaser shall
         have received an Officer's Certificate certifying as to such matters of
         fact as such Purchaser may reasonably  specify to enable such Purchaser
         to determine whether such purchase is so permitted.

                  (viii) Payment of Special Counsel Fees. The Company shall have
         paid,   on  or  before  the  Closing  Date,   the  fees,   charges  and
         disbursements  of the Purchasers'  special counsel referred to in (iii)
         above, to the extent  reflected in a statement of such counsel rendered
         to the Company at least one Business Day prior to the Closing Date.

                  (ix) Private  Placement  Number.  A Private  Placement  Number
         issued by Standard & Poor's CUSIP Service Bureau (in  cooperation  with
         the  Securities   Valuation  Office  of  the  National  Association  of
         Insurance  Commissioners)  shall  have been  obtained  for the Series M
         Notes.

         (b) The  obligation  of the  Company  to  deliver  the  Series  M Notes
hereunder  is  subject  to the  conditions  that (i) the  Commission  shall have
authorized  the  issuance  and sale by the  Company of the Series M Notes at the
price herein provided and said  authorization  shall be in full force and effect
and (ii) the entire  principal amount of the Series M Notes scheduled to be sold
on the  Closing  Date  pursuant  to this  Eleventh  Supplement  shall  have been
tendered by the  Purchasers.  If the  condition  specified  in this Section 5(b)
shall not have been  fulfilled  prior to or on the Closing  Date,  this Eleventh
Supplement and all the obligations of the Company hereunder,  except as provided
in Section 9.4 of the Note Agreement, may be cancelled by the Company.

         (c) If on the Closing Date the Company fails to tender to any Purchaser
the  Series  M Notes  to be  issued  to any  Purchaser  on  such  date or if the
conditions specified in Section 5(a) have not been fulfilled, such Purchaser may
thereupon  elect to be relieved of all further  obligations  under this Eleventh
Supplement.  Without  limiting the  foregoing,  if the  conditions  specified in
Section 5(a) have not been fulfilled, such Purchaser may waive compliance by the
Company with any such condition to such extent as such Purchaser may in its sole
discretion


<PAGE>

determine.  Nothing in this Section 5(c) shall operate to relieve the Company of
any of its obligations  hereunder or to waive any Purchaser's rights against the
Company.

         6. Each Purchaser  represents and warrants that the representations and
warranties  set forth in Section 3.2 of the Note  Agreement are true and correct
on the  date  hereof  with  respect  to the  Series  M Notes  purchased  by such
Purchaser.

         7. The Company and each Purchaser  agree to be bound by and comply with
the terms and  provisions  of the Note  Agreement as if such  Purchaser  were an
original signatory to the Note Agreement.


<PAGE>

California Water Service Company
Eleventh Supplement

         The execution  hereof shall  constitute a contract  between the Company
and the Purchaser(s)  for the uses and purposes  hereinabove set forth, and this
agreement  may  be  executed  in  any  number  of  counterparts,  each  executed
counterpart constituting an original but all together only one agreement.


                                      CALIFORNIA WATER SERVICE COMPANY


                                      By _______________________________________
                                         Name:  Richard D. Nye
                                         Title: Vice President, Chief Financial
                                                Officer and Treasurer


<PAGE>

California Water Service Company
Eleventh Supplement

Accepted as of November 3, 2003


                                      ALLSTATE LIFE INSURANCE COMPANY


                                      By _______________________________________
                                          Name:


                                      By _______________________________________
                                         Name:
                                         Authorized Signatories

<PAGE>

California Water Service Company
Eleventh Supplement


Accepted as of November 3, 2003


                                      NATIONWIDE LIFE INSURANCE COMPANY
                                      NATIONWIDE LIFE AND ANNUITY INSURANCE
                                        COMPANY
                                      NATIONWIDE MUTUAL INSURANCE COMPANY



                                      By _______________________________________
                                         Name:
                                         Title: Authorized Signatory


<PAGE>

                     INFORMATION RELATING TO THE PURCHASERS

                                                            PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER                               SERIES M NOTES TO BE
                                                                 PURCHASED

ALLSTATE LIFE INSURANCE COMPANY                         $10,000,000 to be issued
3075 Sanders Road, STE G5D                              in two Notes as follows:
Northbrook, Illinois  60062-7127
Attention:  Private Placements Department             one Note for $7,500,000,
Telephone Number:  (847) 402-7117                    and one Note for $2,500,000
Telecopier Number:  (847) 402-3092

Payments

All  payments  on or in respect of the Notes to be made by Fedwire  transfer  of
immediately  available  funds,  identifying the name of the Issuer,  the Private
Placement  Number  preceded by "DPP" and the payment as  principal,  interest or
premium, in the exact format as follows:

         BBK =        Harris Trust and Savings Bank
                      ABA #071000288
         BNF =        Allstate Life Insurance Company
                      Collection Account #168-117-0
         ORG =        California Water Service Company
         OBI =        DPP - PPN: 130789 P# 1
                      Payment Due Date (MM/DD/YY) - P ______ (Enter "P" and the
                      amount of principal being remitted, for example,
                      P5000000.00) - I ______ (Enter "I" and the amount of
                      interest being remitted, for example, I225000.00)

Notices

All notices of scheduled payments and written confirmation of each such payment,
to be addressed:

         Allstate Insurance Company
         Investment Operations-Private Placements
         3075 Sanders Road, STE G4A
         Northbrook, Illinois  60062-7127
         Telephone:        (847) 402-6672 Private Placements
         Telecopy:         (847) 326-7032

All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  36-2554642

                                   Schedule A
                                (to Supplement)

<PAGE>

                                                            PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER                               SERIES M NOTES TO BE
                                                                 PURCHASED

NATIONWIDE LIFE INSURANCE COMPANY                                $4,000,000
One Nationwide Plaza (1-33-07)
Columbus, Ohio  43215-2220
Attention:  Corporate Fixed-Income Securities
Facsimile:  (614) 249-4553

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California  Water Service Company,  5.52% Series M Senior Notes due November 1,
2013, PPN: 130789 P# 1, principal, premium or interest") to:

         The Bank of New York
         ABA #021-000-018
         BNF:  IOC566
         F/A/O Nationwide Life Insurance Company
         Attention:  P&I Department
         PPN:  130789 P# 1
         Security Description:  California Water Service Company Series M Notes

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:

         Nationwide Life Insurance Company
         c/o The Bank of New York
         P. O. Box 19266
         Newark, New Jersey 07195
         Attention: P&I Department

         With a copy to:

         Nationwide Life Insurance Company
         One Nationwide Plaza (1-32-05)
         Columbus, Ohio  43215-2220
         Attention:  Investment Accounting

All  notices  and  communications  other than those in respect to payments to be
addressed as first provided above.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number:  31-4156830

                                      A-2
<PAGE>

                                                            PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER                               SERIES M NOTES TO BE
                                                                 PURCHASED

NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY                    $3,000,000
One Nationwide Plaza (1-33-07)
Columbus, Ohio  43215-2220
Attention:  Corporate Fixed-Income Securities
Facsimile:  (614) 249-4553

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California  Water Service Company,  5.52% Series M Senior Notes due November 1,
2013, PPN: 130789 P# 1, principal, premium or interest") to:

         The Bank of New York
         ABA #021-000-018
         BNF:  IOC566
         F/A/O Nationwide Life and Annuity Insurance Company
         Attention:  P&I Department
         PPN:  130789 P# 1
         Security Description:  California Water Service Company Series M Notes

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:

         Nationwide Life and Annuity Insurance Company
         c/o The Bank of New York
         P. O. Box 19266
         Newark, New Jersey 07195
         Attention: P&I Department

         With a copy to:

         Nationwide Life and Annuity Insurance Company
         One Nationwide Plaza (1-32-05)
         Columbus, Ohio  43215-2220
         Attention:  Investment Accounting

All  notices  and  communications  other than those in respect to payments to be
addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  31-1000740

                                      A-3
<PAGE>

                                                            PRINCIPAL AMOUNT OF
NAME AND ADDRESS OF PURCHASER                               SERIES M NOTES TO BE
                                                                 PURCHASED

NATIONWIDE MUTUAL INSURANCE COMPANY                             $3,000,000
One Nationwide Plaza (1-33-07)
Columbus, Ohio  43215-2220
Attention:  Corporate Fixed-Income Securities
Facsimile:  (614) 249-4553

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal  or other  immediately  available  funds  (identifying  each  payment as
"California  Water Service Company,  5.52% Series M Senior Notes due November 1,
2013, PPN: 130789 P# 1, principal, premium or interest") to:

         The Bank of New York
         ABA #021-000-018
         BNF:  IOC566
         F/A/O Nationwide Mutual Insurance Company
         Attention:  P&I Department
         PPN:  130789 P# 1
         Security Description:  California Water Service Company Series M Notes

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:

         Nationwide Mutual Insurance Company
         c/o The Bank of New York
         P. O. Box 19266
         Newark, New Jersey 07195
         Attention: P&I Department

         With a copy to:

         Nationwide Mutual Insurance Company
         One Nationwide Plaza (1-32-05)
         Columbus, Ohio  43215-2220
         Attention:  Investment Accounting

All  notices  and  communications  other than those in respect to payments to be
addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  31-4177100

                                      A-4
<PAGE>

                             [FORM OF SERIES M NOTE]

THIS NOTE HAS NOT BEEN  REGISTERED  WITH THE SECURITIES AND EXCHANGE  COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY SALE, TRANSFER,  PLEDGE OR
OTHER DISPOSITION THEREOF MAY BE MADE ONLY (1) IN A TRANSACTION REGISTERED UNDER
SAID ACT OR (2) IF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS AVAILABLE.


                        CALIFORNIA WATER SERVICE COMPANY

                           5.52% Series M Senior Note
                              Due November 1, 2013

                                 PPN 130789 P# 1

No.                                                            November __, 2003

$

         California  Water  Service  Company,  a  California   corporation  (the
"Company"), for value received, hereby promises to pay to

                              or registered assigns
                       on the first day of November, 2013,
                             the principal amount of


                                                         DOLLARS ($____________)

and to pay interest  (computed  on the basis of a 360-day year of twelve  30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate  of  5.52%  per  annum  from  the  date  hereof  until  maturity,   payable
semiannually on the first day of each May and November in each year  (commencing
on the first of such dates after the date hereof) and at  maturity.  The Company
agrees to pay interest on overdue  principal  (including any overdue required or
optional  prepayment  of  principal)  and  premium,  if any,  and (to the extent
legally  enforceable)  on any overdue  installment  of interest,  at the rate of
7.52% per annum after the due date, whether by acceleration or otherwise,  until
paid. Both the principal hereof and interest hereon are payable at the principal
office of the Company in San Jose,  California in coin or currency of the United
States of  America  which at the time of payment  shall be legal  tender for the
payment of public and private debts.

         This Note is one of a series of Notes (the "Notes")  issued pursuant to
the Eleventh Supplement (the "Eleventh  Supplement") to the Note Agreement dated
as of March 1, 1999 (as from time to time  amended and  supplemented,  the "Note
Agreement"),  between the Company,

                                    EXHIBIT 1
                                 (to Supplement)

<PAGE>

the  Purchasers  named therein and  Additional  Purchasers of Notes from time to
time issued pursuant to any Supplement to the Note Agreement.  This Note and the
holder  hereof are  entitled  equally and ratably  with the holders of all other
Notes of all Series from time to time  outstanding  under the Note  Agreement to
all the  benefits  provided  for thereby or referred to therein.  Each holder of
this  Note  will  be  deemed,  by  its  acceptance  hereof,  to  have  made  the
representation  set forth in Section 3.2 of the Note  Agreement,  provided  that
such holder may (in reliance  upon  information  provided by the Company,  which
shall not be unreasonably withheld) make a representation to the effect that the
purchase by such holder of any Note will not constitute a non-exempt  prohibited
transaction under Section 406(a) of ERISA.

         This Note and the other Notes  outstanding under the Note Agreement may
be declared due prior to their expressed  maturity dates, all in the events,  on
the terms and in the manner and amounts as provided in the Note Agreement.

         The Notes are not subject to  prepayment or redemption at the option of
the Company  prior to their  expressed  maturity  dates  except on the terms and
conditions  and in the amounts and with the  premium,  if any,  set forth in the
Note Agreement.

         This Note is registered on the books of the Company and is transferable
only by surrender  thereof at the principal  office of the Company duly endorsed
or  accompanied  by a  written  instrument  of  transfer  duly  executed  by the
registered  holder of this Note or its  attorney  duly  authorized  in  writing.
Payment of or on account of  principal,  premium,  if any,  and interest on this
Note  shall be made  only to or upon  the  order in  writing  of the  registered
holder.

         This Note shall be construed and enforced in accordance  with,  and the
rights of the parties  shall be governed by, the law of the State of  California
excluding  choice-of-law  principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.


                                     CALIFORNIA WATER SERVICE COMPANY


                                     By ________________________________________
                                        Name:  _________________________________
                                        Title: _________________________________

                                     E-1-2
<PAGE>

                         REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to the Purchasers that:

         1. Corporate Organization,  Subsidiaries. The Company is duly organized
and existing and in good  standing  under and by virtue of the laws of the State
of  California  and is duly  authorized  and  empowered  to own and  operate its
properties  and to carry on its  business,  all as and in the places  where such
properties  are now owned and  operated  and such  business  is  conducted.  The
Company has no Subsidiaries.

         2.  Corporate  Authority.  The  Company  has full  corporate  power and
corporate  authority to sell and issue the Series M Notes. The issuance and sale
of the Series M Notes and the execution and delivery of the Eleventh  Supplement
will have been duly  authorized  by the Board of Directors of the Company and by
the Public  Utilities  Commission of the State of California (the  "Commission")
prior to the Closing  Date,  and no other action is required to be taken by, and
no consents or approvals are required to be obtained from, the  shareholders  of
the Company or any public body or bodies,  and no other corporate  action of the
Company is requisite to such issue and sale.

         3. Business and Property.  Each Purchaser has heretofore been furnished
with a copy of the Company  Information which generally sets forth the principal
properties  of the  Company  and  the  business  conducted  and  proposed  to be
conducted by the Company.

         4.  Indebtedness.  Annex A  attached  hereto  correctly  describes  all
Current Debt, Funded Debt and Capitalized  Leases of the Company  outstanding on
September 30, 2003.

         5.  Financial  Statements  and Reports.  The Company has furnished each
Purchaser with a copy of its audited  financial  reports for 2000, 2001 and 2002
hereinafter  called  the  "Company  Reports,"  and a copy of Form 10-K  filed by
California Water Service Group ("CWSG")  hereinafter called the "CWSG 10-K" with
the  Securities and Exchange  Commission for 2002,  together with all reports or
documents  required to be filed by CWSG  pursuant to Sections  13(a) or 15(d) of
the  Securities  Exchange Act of 1934, as amended,  since the filing of the CWSG
10-K. The Company has also furnished each Purchaser with an unaudited  quarterly
financial  statement for the Company for the fiscal quarter ended June 30, 2003,
and  Forms  10-Q  for CWSG for the  fiscal  quarter  ended  June 30,  2003  (the
"Quarterly  Reports").  The  financial  statements  contained  in the  foregoing
Company Reports, the CWSG 10-K, the Quarterly Reports and such other reports and
documents  were  prepared  in  accordance  with  generally  accepted  accounting
principles upon a consistent  basis and are complete and correct and the balance
sheets included therein fairly present the financial condition of the Company or
CWSG, as the case may be, as at the respective  dates thereof and the Statements
of Income,  Common  Shareholders'  Equity and Cash Flows included therein fairly
present the  results of the  operations  of the Company for the periods  covered
thereby,  subject  in the  case  of  unaudited  statements  to  normal  year-end
adjustments.

         6.  Material  Contracts.  The Company has no contracts or  commitments,
whether  contingent  or other,  which are material to the Company and which were
not made in the ordinary

                                    EXHIBIT 2
                                 (to Supplement)

<PAGE>

course of  business.  Certain  material  contracts  related to water  supply are
listed  in  Annex  B  hereto.  The  Company  has no  contracts  or  commitments,
contingent or other,  which materially and adversely affect or in the future may
(so far as the Company can foresee)  materially and adversely affect the Company
or its business, property, assets, operations or condition,  financial or other.
As of  December  31,  2002,  there were no material  liabilities  of the Company
(other than those under contracts entered into in the normal and ordinary course
of business),  actual,  contingent  or accrued,  which were not reflected in the
Company Reports and CWSG 10-K except for (i) liability in respect of uncompleted
construction  work  under  open  contracts  in  connection  with  the  Company's
construction  program and (ii) the obligations of the Company to contribute to a
pension plan, an employees' savings plan and a health and welfare plan.

         7. No  Material  Adverse  Change.  (a)  There has been no change in the
condition of the Company,  financial or other,  from that set forth or reflected
in the Company  Information,  other than changes  which may have occurred in the
ordinary course of business or by reason of ordinary  dividends paid or declared
or outstanding  First Mortgage Bonds redeemed by the Company in accordance  with
their terms,  and no such changes in the ordinary  course of business  have been
material adverse changes.

         (b)  Since  December  31,  2002,  neither  the  business,   operations,
properties  nor  assets of the  Company  have  been  adversely  affected  in any
material way by any casualties such as fire, windstorm, riot, strike, explosion,
accident, flood, earthquake,  lockout, sabotage, activities of armed forces, act
of God or the public enemy or  condemnation  of  properties by the United States
government or any municipal governmental agency, authority or body.

         8. Title to  Properties.  The  Company is engaged in the  business of a
public utility water company  serving all or a portion of the California  cities
and  communities  listed in the 2002 Company Report and paragraph 9 hereof.  The
Company  has  good  and  merchantable  title,  subject  only to the  lien of the
Mortgage  Indenture  and to current  tax and  assessment  liens,  rights-of-way,
easements  and certain  minor  liens,  encumbrances,  clouds or defects in title
which do not  materially  affect  the use  thereof,  to all the  material  water
distribution  facilities  (including,   without  limitation,   transmission  and
distribution  mains,  pump stations,  wells,  storage tanks and  reservoirs) and
other material units of property used in its business except as follows:

                  (a) some of the offices,  but not its principal office, are in
         leased premises and some wells, well sites and other minor distribution
         facilities are rented; and

                  (b) several  wells are  located on property  which the Company
         does not own but in which it has an easement  for the  location of such
         wells;

and except as to easements and  rights-of-way  and certain  parcels of land (not
exceeding for said parcels of land an aggregate book value of  $1,000,000)  with
respect to which there is a possibility of reverter if the property ceases to be
used for public utility  purposes,  and,  except that the greater portion of its
transmission and distribution  systems is located in public highways and streets
and in  rights-of-way  owned by the Company over lands of others,  the Company's
title thereto is fee simple. Except for parcels of land having an aggregate book
value of not more than $1,000,000,  the Company has good and merchantable  title
to all its other  property  and assets

                                     E-2-2
<PAGE>

subject only to the lien of the Mortgage Indenture and the lien of the Dominguez
Mortgage  Indenture and to current tax and assessment  liens and minor liens and
encumbrances  which  do  not  materially  affect  the  use  thereof.  All of the
properties  of  the  Company  are  located  in  the  State  of  California   and
substantially  all of the properties of the Company used or useful in its public
utility business are subject to the Mortgage Indenture. As used herein, the term
"Dominguez  Mortgage  Indenture" means the Trust Indenture dated as of August 1,
1954, as supplemented  from time to time,  between the Company,  as successor to
Dominguez Water Company ("Dominguez") and U.S. Bank, as Trustee,  which provides
a lien  on  properties  owned  by  Dominguez  immediately  prior  to the  merger
described  in  paragraph 9 hereof  which lien  secures  $9,000,000  in aggregate
principal  amount of Dominguez  bonds which were assumed by the Company upon the
merger.

         9. Franchises.  The Company has, in its judgment,  adequate  franchises
and  permits  without  burdensome   restrictions  (other  than  those  typically
contained  in  franchises  and  permits  of this  type) to allow the  Company to
conduct the business in which it is engaged.

         The Company has two classes of  franchises to install and operate water
pipes and mains under public streets and highways:

                  (a) so-called  "constitutional"  franchises obtained by virtue
         of the  provisions  of  Article  XI,  Section  19,  of  the  California
         Constitution, as in effect prior to 1911; and

                  (b) franchises granted pursuant to statutory authority.

         The Company  believes,  based on the advice of counsel (which is itself
based upon the assumption of the accuracy of information obtained by the Company
from sources  believed to be reliable  that the  following  cities served by the
Company were all incorporated prior to 1911:

            Bakersfield            Marysville              South San Francisco
            Chico                  Oroville                Stockton
            Dixon                  Redondo Beach           Visalia
            Hermosa Beach          Salinas                 Willows
            King City              San Mateo
            Livermore              Selma

that water  distribution  systems were constructed and service  furnished to the
inhabitants  of each by various  predecessors  of the Company prior to 1911, and
that there were no public water works owned or controlled by the municipality in
any of them prior to 1911), that the Company has a "constitutional" franchise in
each of the above cities and under such constitutional franchise has a perpetual
right which was not  repealed  by the repeal of Article  XI,  Section 19, of the
California  Constitution  to continue to occupy  public  streets of each of said
cities  with its pipes and mains and to lay down  additional  pipes and mains in
said streets for the supplying of water, subject to reasonable regulation by the
respective  municipalities.  The Company also  believes,  based on the advice of
counsel,  that this right is not limited to streets in which pipes or mains were
laid  prior  to  1911  but   extends  at  least  to  all  streets  in  the  said
municipalities  as they  existed  at the date of  repeal  of the  constitutional
provision in 1911 and probably also extends to territory  incorporated

                                     E-2-3
<PAGE>

into each  respective  city after such  repeal,  although  this latter  question
remains  somewhat  in doubt in the  absence  of a final  decision  of the courts
thereon.  The  Company  holds  either  by  assignment  or  as  original  grantee
franchises  granted  under  statutory  authority  by the  Counties of Kern,  Los
Angeles,  San  Joaquin,  Santa  Clara and  Monterey,  the Cities of  Montebello,
Torrance, Cupertino, Sunnyvale, Los Altos, Mountain View, Bakersfield, Commerce,
San Carlos,  Rolling Hills Estates and Thousand Oaks, and the Towns of Los Altos
Hills and Atherton.  Following  incorporation of the City of Rancho Palos Verdes
in 1973, the Company made  franchise  payments to the City and the City accepted
the same as successor in interest to the  grantor's  rights under the  Company's
former  franchise  from the County of Los Angeles;  the City has agreed that the
Company may exercise its rights in the City under its current  County  franchise
until the expiration of that franchise in 2012.  The Company's  franchises  from
the Cities of Palos Verdes Estates,  Menlo Park and Woodside terminated in 1977,
1993 and 1994,  respectively.  While  none of the Cities  and the  Company  have
executed a new  franchise  agreement,  the Company has made and will continue to
make franchise  payments to each of the Cities in accordance with the provisions
of the prior franchise.  In other areas where the Company has no franchise,  the
Company or its predecessors  have  distributed  water for many years and, to the
Company's  knowledge,  no question  has ever been raised as to the right to make
such distribution and to maintain all pipes and mains necessary therefor.

         On May 25,  2000,  Dominguez  Service  Corporation  was merged into the
Company and subsequently  Dominguez and its  subsidiaries  were also merged into
the Company (collectively,  the "merger"). The Company acquired in the Dominguez
merger  operations in the following  cities,  counties,  townships or localities
that Dominguez previously served:

            Bodfish                Kern County             Los Angeles County
            Carson                 Kernville               Lucerne
            Compton                Lake Hughes             Mountain Shadows
            Duncans Mills          Lakeland                Onyx
            Fremont Valley         Lancaster               Squirrel Valley
            Guerneville            Leona Valley            Torrance
            Harbor City            Long Beach              Wofford Heights

Water  distribution  systems  were  constructed  and  service  furnished  to the
inhabitants of the localities currently known as Carson,  Compton,  Harbor City,
Long Beach and Torrance by various predecessors of the Company prior to 1911 and
the Company  believes  that it has a prior  right to operate in these  locations
which right was not extinguished by the incorporation of these cities subsequent
to 1911.  Except as noted below,  Dominguez has no franchises  from these cities
and has made no franchise payments to them and, to the Company's  knowledge,  no
question has ever been raised as to the right to make water  distribution and to
maintain all pipes and mains necessary therefor.

         As  to  the  remaining  localities,   Dominguez  has  received  written
franchise  agreements  which  are in full  force  and  effect  and has  paid all
franchise fees to date, with the exception of Compton, as to which the franchise
expired without renewal in 1994.  Dominguez  continued to provide water services
to Compton  subsequent to the expiration of the franchise,  and to pay franchise
fees, and to the Company's  knowledge no question has ever been raised as to the
right

                                     E-2-4
<PAGE>

to make  such  distribution  and to  maintain  all  pipes  and  mains  necessary
therefor.  However,  as of May 2003,  the County of Los  Angeles  cancelled  its
Dominguez  franchise and incorporated the franchise territory into the Company's
Los Angeles County franchise.

         10.  Condition  of Assets.  The  physical  assets of the Company are in
sound operating  condition,  there are no material arrears in the maintenance of
any such physical assets and the Company  believes that its sources of water are
adequate to meet its requirements for the foreseeable future.

         11. Pending Litigation, Proceedings. (a) There are no actions, suits or
proceedings  pending  at law or in equity or  before or by any  federal,  state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality,  domestic  or foreign,  or, to the  knowledge  of the  Company,
threatened  against or affecting the Company not adequately covered by insurance
or for  which  reserves  adequate  in  the  Company's  judgment  have  not  been
established  which  involve,  in  the  opinion  of  the  Company,  a  reasonable
possibility of judgments or liabilities  exceeding $500,000 in the aggregate net
of insurance, or which may, in the opinion of the Company result in any material
adverse change in the business or properties or in the  condition,  financial or
other, of the Company,  or the ability of the Company to perform its obligations
under the Eleventh Supplement or the Series M Notes.

         (b) There  are no  proceedings  pending  or,  to the  knowledge  of the
Company,  threatened  against the  Company  before or by any  federal,  state or
municipal commission, board or other administrative agency, which materially and
adversely affect the water rates of the Company presently in effect.

         (c) The  Company is not in  default  with  respect to any order,  writ,
injunction  or  decree  of  any  court,  or  any  federal,  state  or  municipal
commission,  board or other  administrative  agency and the Company has complied
with all applicable statutes and regulations of the United States of America and
of any state,  municipality or agency of any thereof,  in respect of the conduct
of its business known or believed by the Company to be applicable  thereto,  the
failure to comply  with which  could  reasonably  be expected to have a material
adverse effect on the Company or its properties.

         12. No  Condemnation  Proceedings.  Since January 1, 1995, no elections
have  been  held  or  other  actions  taken   authorizing  the  commencement  of
proceedings for  condemnation of any of the properties of the Company.  However,
from time to time  there are  expressions  of  interest  made by public  bodies,
elected or appointed municipal officials,  persons seeking political position or
citizens groups urging acquisition of the Company's facilities in one or more of
the  communities  served by the  Company.  The Company does not believe that any
acquisition  by a city or  municipality  of its  properties by  condemnation  or
threat thereof would be adverse to the holders of the Series M Notes.

         13. No  Burdensome  Restrictions.  The  Company  is not  subject to any
burdensome corporate  restrictions in its Articles of Incorporation,  By-Laws or
otherwise, which materially and adversely affect or in the future may (so far as
the Company can  foresee)  materially  and

                                     E-2-5
<PAGE>

adversely affect the Company or its business,  property,  assets,  operations or
condition, financial or other.

         14. Regulatory  Status,  Approval.  (a) The Company is not a registered
holding company or a subsidiary of a registered  holding company and the Company
is not  required to register  under the Public  Utility  Holding  Company Act of
1935, as amended. The Company is subject to the jurisdiction of the Commission.

         (b) No consent of, approval or authorization by, filing or registration
with, or notice to any  governmental  or public  authority or agency is required
for the  issuance,  sale or  delivery  of the  Series M Notes or the  execution,
delivery or performance of the Eleventh Supplement, other than the authorization
of the Commission,  which authorization has been duly obtained, is in full force
and effect and is not subject to any appeal, hearing,  rehearing or contest. All
conditions  contained in any such authorization which were to be fulfilled on or
prior to the issuance of the Series M Notes have been fulfilled. The Company has
furnished  to your special  counsel  true,  correct and complete  copies of said
authorization  and all  applications  heretofore  filed with or submitted to the
Commission in connection with its action to obtain said authorization.

         15. No Defaults,  Compliance with Other Instruments. The Company is not
in default under any outstanding  indentures,  contracts or agreements which are
material to the Company including,  without limitation,  the Mortgage Indenture;
and on the  Closing  Date there will not exist any  condition  which  would be a
default  under any such  indenture,  contract or  agreement.  The  execution and
delivery  of the  Eleventh  Supplement,  the  consummation  of the  transactions
therein  provided  for  and  compliance  with  the  provisions  of the  Eleventh
Supplement  and the Series M Notes by the Company  will not violate or result in
any breach of the terms,  conditions or  provisions  of, or constitute a default
under, its Articles of Incorporation,  By-Laws or any indenture,  mortgage, deed
of  trust,  bank  loan or  credit  agreement,  or other  material  agreement  or
instrument to which the Company is a party or by which the Company may be bound,
nor will  such  acts  result  in the  violation  of any  applicable  law,  rule,
regulation  or order  applicable  to the  Company  of any court or  governmental
authority  having  jurisdiction in the premises or in the creation or imposition
of any lien, charge or encumbrance of any nature  whatsoever,  upon any property
or assets of the Company.

         16. Leases.  The Company has the right to, and does, enjoy peaceful and
undisturbed possession under all material leases to which it is a party or under
which it is operating.  All such leases are valid,  subsisting and in full force
and effect, and the Company is not in default under any thereof and no event has
occurred  and is  continuing,  and no  condition  exists  that,  after notice or
passage of time or both could become a material default under any such Lease.

         17. Use of Proceeds.  The Company will use the gross  proceeds  derived
from the sale of the Series M Notes under the Eleventh  Supplement  to refinance
existing   Indebtedness  and  for  general  corporate  purposes.   None  of  the
transactions  contemplated  in  the  Eleventh  Supplement  (including,   without
limitation thereof, the use of the proceeds from the sale of the Series M Notes)
will  violate or result in a violation of Section 7 of the  Securities  Exchange
Act of 1934, as amended,  or any regulations issued pursuant thereto,  including
without  limitation,  Regulations  U, T and X of the Board of  Governors  of the
Federal  Reserve  System,  12 C.F.R.,  Chapter II. The

                                     E-2-6
<PAGE>

Company  does not own or intend to carry or purchase any "margin  stock"  within
the meaning of said Regulation U, including  margin stock  originally  issued by
it.  None of the  proceeds  from the sale of the  Series M Notes will be used to
purchase or carry (or refinance any borrowing the proceeds of which were used to
purchase or carry) any margin stock.

         18. ERISA.  (a) The fair market value of all assets under all "employee
pension  benefit  plans" (as such term is  defined  in  Section  3(2) of ERISA),
maintained  by the Company,  as from time to time in effect,  as of December 31,
2002,  the last annual  valuation  date,  was exceeded by the actuarial  present
value of all benefits vested under the Plans by $7,050,000.

         (b) Neither any of the Plans nor any of the trusts created  thereunder,
nor  any  trustee  or  administrator  thereof,  has  engaged  in  a  "prohibited
transaction,"  as such term is defined in Section  4975 of the Code which  could
subject  the  Plans  or  any  of  them,  any  such  trust,  or  any  trustee  or
administrator  thereof,  or any disqualified person with respect to the Plans to
the tax or penalty on  prohibited  transactions  imposed by said  Section  4975,
except  that,  with  respect to any  actions  or  omissions  of  administrators,
trustees,  other fiduciaries,  parties in interest or disqualified persons of or
in respect to the Plans (other than  employees of the Company),  the Company has
no knowledge  that any of such persons has  committed a prohibited  transaction,
nor has the Company participated knowingly in or knowingly undertaken to conceal
a prohibited  transaction with or by any of such persons nor enabled any of them
to commit a prohibited transaction.

         (c)  Neither  any of the  Plans  subject  to Title IV of ERISA  nor any
trusts  related  to such  plans  have been  terminated,  nor have there been any
Reportable Events, as that term is defined in Section 4043 of ERISA (as modified
by the  regulations  thereunder),  in respect of those plans since the effective
date of ERISA.

         (d)  Neither any of the Plans which are subject to Section 302 of ERISA
nor any trusts  related to such plans have  incurred  any  "accumulated  funding
deficiency,"  as such  term is  defined  in said  Section  302  (whether  or not
waived), since the effective date of ERISA.

         (e) The consummation of the  transactions  provided for in the Eleventh
Supplement  and  compliance by the Company with the  provisions  thereof and the
Series M Notes issued  thereunder  will not involve any  prohibited  transaction
within the meaning of ERISA or Section 4975 of the Code.

         19. Taxes. All Federal,  state and local taxes and assessments due from
the Company have been (a) fully paid or adequately  provided for on the books of
the Company in accordance with generally accepted  accounting  principles or (b)
are being contested in good faith by the Company.  There has been no examination
of the Federal income tax returns of the Company by the Internal Revenue Service
subsequent to the examinations of the returns for tax years 1984-1991.

         20. Compliance with Laws. To the best of the Company's knowledge, after
due inquiry, the Company is in compliance with all applicable Federal, state, or
local  laws,  statutes,  rules,  regulations  or  ordinances  relating to public
health, safety or the environment,  including,  without

                                     E-2-7
<PAGE>

limitation,  relating to  releases,  discharges,  emissions or disposals to air,
water,  land or ground water,  to the withdrawal or use of ground water,  to the
use, handling or disposal of polychlorinated biphenyls (PCB's), asbestos or urea
formaldehyde,  to the  treatment,  storage,  disposal or management of hazardous
substances   (including,   without  limitation,   petroleum,   its  derivatives,
by-products or other hydrocarbons), and to exposure to hazardous substances, the
failure to comply  with which  could  reasonably  be expected to have a material
adverse  effect on the Company or its  properties.  Except as  disclosed  in the
"Environmental  Matters" section of Item 1 of the CWSG 10-K, the  "Environmental
Matters"  section of CWSG's  2002  Annual  Report  and the  "Legal  Proceedings"
section  of Item 3 of the CWSG  10-K  with  respect  to  matters  in  Chico  and
Marysville,  California,  the  Company  does  not know of any  liability  of the
Company  under  the  Comprehensive  Environmental  Response,   Compensation  and
Liability   Act  of  1980,   as  amended  by  the   Superfund   Amendments   and
Reauthorization Act of 1986 (42 U.S.C. Section 9601 et seq.) with respect to any
property now or heretofore owned or leased by the Company.

         21.  Full  Disclosure.  The  financial  statements  referred  to in the
Eleventh  Supplement  do not,  nor does the  Eleventh  Supplement,  the  Company
Information  or any written  statement  (including  without  limitation the 2002
Company  Report and the 2002 CWSG  Report)  furnished  by the  Company to you in
connection with the  negotiation of the sale of the Series M Notes,  contain any
untrue  statement of a material  fact or, taken  together,  omit a material fact
necessary to make the  statements  contained  therein or herein not  misleading.
There is no fact which the Company  has not  disclosed  to you in writing  which
materially  affects  adversely nor, so far as the Company can now foresee,  will
materially  affect  adversely the properties,  business,  prospects,  profits or
condition  (financial or otherwise) of the Company or the ability of the Company
to perform its obligations under the Note Agreement,  the Eleventh Supplement or
the Series M Notes.

         22. Private Offering.  Neither the Company, directly or indirectly, nor
any agent on its  behalf  has  offered  or will  offer the Series M Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
M Notes or any similar  Security from or has otherwise  approached or negotiated
or will  approach or  negotiate  in respect of the Series M Notes or any similar
Security  with any Person  other than the  Purchasers  and not more than six (6)
other institutional investors,  each of whom was offered a portion of the Series
M Notes at  private  sale for  investment.  Neither  the  Company,  directly  or
indirectly,  nor any agent on its behalf has  offered or will offer the Series M
Notes or any  similar  Security  or has  solicited  or will  solicit an offer to
acquire  the  Series M Notes or any  similar  Security  from any Person so as to
cause the  issuance  and sale of the  Series M Notes  not to be exempt  from the
provisions of Section 5 of the Securities Act of 1933, as amended.

         23. Foreign Assets Control  Regulations,  Etc.  Neither the sale of the
Series M Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control  regulations of the United States Treasury  Department (31 CFR, Subtitle
B,  Chapter V, as  amended)  or any  enabling  legislation  or  executive  order
relating  thereto.  Without  limiting the foregoing,  the Company (a) is not and
will not become a person  whose  property or  interests  in property are blocked
pursuant to Section 1 of Executive  Order 13224 of September  23, 2001  Blocking
Property  and  Prohibiting  Transactions

                                     E-2-8
<PAGE>

With Persons Who Commit,  Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079  (2001)) or (b) does not and will not engage in any  Material  dealings or
transactions, or is otherwise associated, with any such person.

         The Company is in compliance in all material  respects with the Uniting
and Strengthening  America by Providing  Appropriate Tools Required to Intercept
and Obstruct  Terrorism (USA Patriot Act of 2001).  No part of the proceeds from
the sale of the Series M Notes  hereunder will be used,  directly or indirectly,
for any payment to any  governmental  official  or  employee,  political  party,
official of a political  party,  candidate for  political  office or anyone else
acting in an official capacity,  in order to obtain,  retain or direct business,
in violation of the United  States  Foreign  Corrupt  Practices  Act of 1977, as
amended.

                                     E-2-9
<PAGE>

                CURRENT DEBT, FUNDED DEBT AND CAPITALIZED LEASES
                            AS OF SEPTEMBER 30, 2003

1.       Current Debt

         None.

2.       Funded Debt

         $56,600,000  outstanding  under the Company's  various  series of First
         Mortgage Bonds with due dates ranging from 2020 to 2023.

         $4,000,000 First Mortgage Bonds,  Series J due 2023 (formerly Dominguez
         Water Company).

         $5,000,000 First Mortgage Bonds,  Series K due 2012 (formerly Dominguez
         Water Company).

         $20,000,000 Series A Senior Notes due November 1, 2025.

         $20,000,000 Series B Senior Notes due November 1, 2028.

         $20,000,000 Series C Senior Notes due November 1, 2030.

         $20,000,000 Series D Senior Notes due November 1, 2031.

         $20,000,000 Series E Senior Notes due May 1, 2032.

         $20,000,000 Series F Senior Notes due November 1, 2017.

         $20,000,000 Series G Senior Notes due November 1, 2022.

         $20,000,000 Series H Senior Notes due December 1, 2022.

         $10,000,000 Series I Senior Notes due May 1, 2023.

         $10,000,000 Series J Senior Notes due May 1, 2018.

         $10,000,000 Series K Senior Notes due June 30, 2010.

         $10,000,000 Series L Senior Notes due March 1, 2018.

         $2,719,000 California Department of Water Resources Loans maturing 2011
         to 2032.

         $430,000 obligations due on water system acquisitions.

3.       Capitalized Leases

         None.

                                     ANNEX A
                                 (to Exhibit 2)

<PAGE>

                         MATERIAL WATER SUPPLY CONTRACTS

1.       Water  Supply  Contract  between  the  Company  and the County of Butte
         relating to the Company's Oroville District.

2.       Water Supply Contract  between the Company and Kern County Water Agency
         relating to the Company's Bakersfield District.

3.       Water  Supply  Contract  between the Company  and  Stockton  East Water
         District relating to the Company's Stockton District.

4.       Amended  Contract  between the Company and Stockton East Water District
         relating to the Company's Stockton District.

5.       Settlement  Agreement and Master Water Sales Contract  between the City
         and County of San Francisco and Certain Suburban Purchasers.

6.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's Bear Gulch District.

7.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's San Carlos District.

8.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's San Mateo District.

9.       Supplement  to  Settlement  Agreement  and Master Water Sales  Contract
         between the Company and the City and County of San  Francisco  relating
         to the Company's South San Francisco District.

10.      Water Supply Contract  between the Company and Santa Clara Valley Water
         District relating to the Company's Los Altos District.

11.      Water Supply Contract  between the Company and Pacific Gas and Electric
         Company related to the Company's Oroville District.

12.      Water  Supply  Contract  between the Company and Alameda  County  Flood
         Control  and  Water  Conservation  District  related  to the  Company's
         Livermore District.

13.      Water Supply Contract  between the Company,  ARCO Products  Company and
         West Basin Municipal Water District relating to recycled water.

14.      Northeast  Bakersfield  Water  Supply  Agreement  between  the  City of
         Bakersfield and the Company.

                                     ANNEX B
                                 (to Exhibit 2)

<PAGE>

                         DESCRIPTION OF CLOSING OPINION
                            OF COUNSEL TO THE COMPANY

         The closing opinion of Bingham  McCutchen LLP, counsel for the Company,
which is called for by Section  5(a)(iii) of the Eleventh  Supplement,  shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory in
scope and form to the Purchasers and shall be to the effect that:

                  1. The Company is a  corporation  duly  incorporated,  validly
         existing and in corporate good standing under the laws of California.

                  2. The  execution  and  delivery  by the  Company  of the Note
         Agreement,  the Eleventh  Supplement and the Notes, and the performance
         by the  Company  of its  obligations  under  the  Note  Agreement,  the
         Eleventh  Supplement and the Notes, are within the Company's  corporate
         powers and have been duly authorized by all requisite  corporate action
         on the part of the Company. The Company has duly executed and delivered
         the Note Agreement, the Eleventh Supplement and the Notes.

                  3. Each of the Note Agreement, the Eleventh Supplement and the
         Notes  constitutes  a  valid  and  binding  agreement  of the  Company,
         enforceable  against the Company in accordance with its terms. Based on
         Section 1646.5 of the California  Civil Code, a California  state court
         and a Federal court which applies the law of the State of California to
         the  Note  Agreement,  the  Eleventh  Supplement  and the  Notes  would
         recognize and give effect to the choice of law  provisions set forth in
         the Note Agreement, the Eleventh Supplement and the Notes.

                  4. The  execution  and  delivery  by the  Company  of the Note
         Documents,  and compliance by the Company with the  provisions  thereof
         will not, to the best of our  knowledge,  result in a breach or default
         (or  give  rise  to  any   right  of   termination,   cancellation   or
         acceleration)  under the  Articles of  Incorporation  or By-Laws of the
         Company, or the Mortgage  Indenture,  the Business Loan Agreement dated
         as of  February  28,  2003,  between the Company and Bank of America as
         amended  by  Amendment  No. 1 thereto  dated as of June 25,  2003,  the
         Business Loan Agreement dated as of February 28, 2003,  among CWSG, CWS
         Utility Services, New Mexico Water Service Company and Bank of America,
         or any other  agreement  or  instrument  that is  listed as a  material
         contract  in  CWSG's  Annual  Report  on Form  10-K for the year  ended
         December 31, 2002 or any agreement or other  instrument  that is listed
         as a material  contract  in CWSG's  Annual  Report on Form 10-K for the
         year ended December 31, 2002. To the best of our knowledge,  no consent
         or  approval  by, or any  notification  of or filing  with,  any court,
         public body or authority of the State of  California  is required to be
         obtained or effected by the Company in connection  with the  execution,
         delivery and  performance  by the Company of the Note  Documents or the
         issuance  or sale of the  Notes,  except for the  authorization  of the
         Commission,  which  authorization has been duly obtained and is in full
         force and effect.

                                    EXHIBIT 3
                                 (to Supplement)

<PAGE>

                  5.  Based upon the  representations  set forth in Section 6 of
         the   Eleventh   Supplement,   the   accuracy  of  which  we  have  not
         independently verified or investigated, the issuance, sale and delivery
         of the  Notes  under the  circumstances  contemplated  by the  Eleventh
         Supplement do not, under existing law,  require the registration of the
         Notes  under  the   Securities   Act  of  1933,  as  amended,   or  the
         qualification  of the Eleventh  Supplement  or an  indenture  under the
         Trust Indenture Act of 1939, as amended.

                  6. Based upon the  assumption  of the accuracy of  information
         obtained  by the  Company  from  sources  believed by the Company to be
         reliable (a) that the  following  cities served by the Company were all
         incorporated prior to 1911:

            Bakersfield            Marysville              South San Francisco
            Chico                  Oroville                Stockton
            Dixon                  Redondo Beach           Visalia
            Hermosa Beach          Salinas                 Willows
            King City              San Mateo
            Livermore              Selma

         (b) that  water  distribution  systems  were  constructed  and  service
furnished  to the  inhabitants  of each by various  predecessors  of the Company
prior to 1911; and

         (c) that there were no public  water works owned or  controlled  by the
municipality in any of them prior to 1911;

                  in our opinion,

                  (i) the Company has a  "constitutional"  franchise  in each of
         the  above  cities  and under  such  "constitutional"  franchise  has a
         perpetual  right  which was not  repealed  by the repeal of Article XI,
         Section 19, of the California Constitution to continue to occupy public
         streets  of each of said  cities  with  pipes and mains and to lay down
         additional  pipes and mains in said streets for the supplying of water,
         subject to reasonable regulation by the respective municipalities;

                  (ii) this right is not  limited  to streets in which  pipes or
         mains  were laid prior to 1911 but  extends at least to all  streets in
         the said  municipalities  as they  existed at the date of repeal of the
         constitutional provision in 1911; and

                  (iii) the right  probably  also extends to  territory  annexed
         into each  respective  city after such  repeal,  although  this  latter
         question  is not  entirely  free from  doubt in the  absence of a final
         decision of the courts thereon.

                  7.   Dominguez   Services    Corporation   (along   with   its
         subsidiaries,  "Dominguez")  was merged into the Company  effective May
         25, 2000 and  Dominguez  Water Company was also merged into the Company
         effective  October 12,  2000.  In the  Dominguez  mergers,  the Company
         acquired the operations of Dominguez,  which to our knowledge  included
         service to the following cities, counties, townships or localities:

                                     E-3-2
<PAGE>

            Bodfish                Kernville               Mountain Shadows
            Carson                 Lake Hughes             Onyx
            Compton                Lakeland                Torrance
            Duncans Mills          Lancaster               Squirrel Valley
            Fremont Valley         Leona Valley            Wofford Heights
            Guerneville            Long Beach              Los Angeles County
            Harbor City            Lucerne                 Kern County

                  8. We note that the Officers'  Certificates state that: (a) to
         the Company's  knowledge,  water distribution  systems were constructed
         and service  furnished to the  inhabitants of the localities  currently
         known as Carson,  Compton,  Harbor  City,  Long Beach and  Torrance  by
         various  predecessors  of the  Company  prior to 1911;  (b) the Company
         believes that it has a prior right to operate in these  locations which
         right  was  not  extinguished  by the  incorporation  of  these  cities
         subsequent  to 1911;  (c)  except  as  noted  below,  to the  Company's
         knowledge Dominguez has no franchises from these cities and has made no
         franchise  payments to them;  and (d) to the  Company's  knowledge,  no
         question   has  ever  been  raised  as  to  the  right  to  make  water
         distribution and to maintain all pipes and mains necessary therefor.

                  9. We note that the Officers'  Certificates state that: (a) as
         to the  remaining  localities  listed in paragraph 7, to the  Company's
         knowledge,  Dominguez has received written  franchise  agreements which
         are in full force and effect and has paid all  franchise  fees to date,
         with the  exception  of  Compton,  as to which  the  franchise  expired
         without  renewal in 1994;  (b) to the  Company's  knowledge,  Dominguez
         continued  to  provide  water  services  to Compton  subsequent  to the
         expiration of the franchise,  and to pay franchise fees; and (c) to the
         Company's  knowledge,  no question has ever been raised as to the right
         to make such distribution and to maintain all pipes and mains necessary
         therefor.  However, as of May 2003, the County of Los Angeles cancelled
         its Dominguez  franchise and incorporated the franchise  territory into
         the Company's Los Angeles County franchise.

         The opinion of Bingham  McCutchen  LLP shall  cover such other  matters
relating  to the sale of the  Series M Notes as the  Purchasers  may  reasonably
request and shall provide that Chapman and Cutler LLP in delivering  its opinion
under the Note Agreement may rely on the opinion of Bingham  McCutchen LLP as to
matters of California law. With respect to matters of fact on which such opinion
is based, such counsel shall be entitled to rely on appropriate  certificates of
public officials and officers of the Company.

                                     E-3-3
<PAGE>

                DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION

         The closing  opinion of Chapman and Cutler LLP,  special counsel to the
Purchasers, called for by Section 5(a)(iii) of the Eleventh Supplement, shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory in
form and substance to the Purchasers and shall be to the effect that:

                  1. The Company is a corporation,  validly existing and in good
         standing  under  the  laws  of the  State  of  California  and  has the
         corporate power and the corporate  authority to execute and deliver the
         Eleventh Supplement and to issue the Series M Notes.

                  2. The Note  Agreement and the Eleventh  Supplement  have been
         duly  authorized by all necessary  corporate  action on the part of the
         Company,  have been duly  executed  and  delivered  by the  Company and
         constitute  the  legal,  valid  and  binding  contract  of the  Company
         enforceable  in  accordance  with its  terms,  subject  to  bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights  generally,  and general  principles  of equity  (regardless  of
         whether  the   application  of  such  principles  is  considered  in  a
         proceeding in equity or at law).

                  3.  The  Series  M Notes  have  been  duly  authorized  by all
         necessary  corporate action on the part of the Company,  have been duly
         executed and delivered by the Company and constitute  the legal,  valid
         and binding  obligations of the Company  enforceable in accordance with
         their terms, subject to bankruptcy,  insolvency,  fraudulent conveyance
         and similar laws affecting  creditors'  rights  generally,  and general
         principles of equity  (regardless  of whether the  application  of such
         principles is considered in a proceeding in equity or at law).

                  4. The issuance, sale and delivery of the Series M Notes under
         the circumstances contemplated by the Eleventh Supplement do not, under
         existing law,  require the registration of the Series M Notes under the
         Securities  Act  of  1933,  as  amended,  or  the  qualification  of an
         indenture under the Trust Indenture Act of 1939, as amended.

         The  opinion  of Chapman  and  Cutler LLP may rely upon the  opinion of
Bingham  McCutchen LLP as to matters of  California  law. The opinion of Chapman
and Cutler LLP shall also  state that the  opinion of Bingham  McCutchen  LLP is
satisfactory  in scope and form to Chapman  and  Cutler  LLP and that,  in their
opinion, the Purchasers are justified in relying thereon.

         In rendering  the opinion set forth in  paragraph 1 above,  Chapman and
Cutler LLP may rely,  as to matters  referred to in  paragraph 1, solely upon an
examination of the Articles of Incorporation  certified by, and a certificate of
good  standing  of the  Company  from,  the  Secretary  of State of the State of
California,  the By-laws of the Company and the general business corporation law
of the State of California.

                                     E-3-4
<PAGE>

         With  respect to  matters  of fact upon  which  such  opinion is based,
Chapman and Cutler LLP may rely on appropriate  certificates of public officials
and  officers  of the Company  and upon  representations  of the Company and the
Purchasers  delivered in  connection  with the issuance and sale of the Series M
Notes.

                                     E-3-5