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                                 Exhibit 10.4E



Inland Empire LPO
3633 Inland Empire Blvd., Suite 855
Ontario, CA 91764



                                 June 30, 1997



Southwest Water Company
225 N. Barranca Ave, Suite 200
West Covina, CA 91719-160525


Gentlemen:

     This letter is to confirm that Wells Fargo Bank, National Association
successor-by-merger to First Interstate Bank of California ("Bank") has agreed
to extend the maturity date of that certain credit accommodation granted by Bank
to Southwest Water Company ("Borrower") in the original maximum principal amount
of FIVE MILLION DOLLARS ($5,000,000.00) with said principal amount subsequently
increased to SIX MILLION DOLLARS ($6,000,000.00) pursuant to the terms and
conditions of that certain Credit Agreement between Bank and Borrower dated as
of December 22, 1992, as amended from time to time (the "Agreement").

     The maturity date of said credit accommodation is hereby extended until
September 1, 1997.  Until such date, all terms and conditions of the Agreement
which pertain to said credit accommodation shall remain in full force and
effect, except as expressly modified hereby.  The promissory note dated as of
December 22, 1992, as modified and/or amended from time to time, executed by
Borrower and payable to the order of Bank which evidences said credit
accommodation, a copy of which is attached hereto as Exhibit A (the "Note"),
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shall be deemed modified as of the date this letter is acknowledged by Borrower
to reflect the new maturity date set forth above.  All other terms and
conditions of the Note remain in full force and effect, without waiver or
modification.

     Borrower acknowledges that Bank has not committed to make any renewal or
further extension of the maturity date of the above-described credit
accommodation beyond the new maturity date 
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specified herein, and that any such renewal or further extension remains in the
sole discretion of Bank. This letter constitutes the entire agreement between
Bank and Borrower with respect to the maturity date extension for the above-
described credit accommodation, and supersedes all prior negotiations,
discussions and correspondence concerning said extension.

          Please acknowledge your acceptance of the terms and conditions
contained herein by dating and signing one copy below and returning it to my
attention at the above address on or before July 15, 1997.

                                Very truly yours,

                                WELLS FARGO BANK,
                                NATIONAL ASSOCIATION, SUCCESSOR-  
                                BY-MERGER TO FIRST INTERSTATE   
                                BANK OF CALIFORNIA

                                By: /s/RICHARD MADSEN
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                                    Richard Madsen
                                    Vice President


Acknowledged and accepted as of June 30, 1997:


SOUTHWEST WATER COMPANY

By: /s/PETER J. MOERBEEK
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    Peter J. Moerbeek
Title: VP Finance, CFO
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By: /s/ STEPHEN J. MUZI, JR.
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    Stephen J. Muzi, Jr.
Title: Corporate Controller
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