Exhibit 4.14

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                        California Water Service Company

                       Fourth Supplement to Note Agreement

                           Dated as of August 15, 2002

                   Re: $20,000,000 5.90% Series F Senior Notes
                              Due November 1, 2017

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                                      -38-
<PAGE>

                       Fourth Supplement to Note Agreement

                                                                     Dated as of
                                                                 August 15, 2002

To the Purchasers named in
Schedule A hereto

Ladies and Gentlemen:

This Fourth Supplement to Note Purchase  Agreement (the "Fourth  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 the  Purchasers  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 5.90%  Series F Senior  Notes due November 1, 2017 (the
"Series  F  Notes").  The  Series F  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  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  substitution
therefor  pursuant  to Section  9.2 of the Note  Agreement).  The Series F 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 each  Purchaser,  and each
Purchaser  agrees to purchase from the Company,  Series F 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.

                                      -39-
<PAGE>

3. Delivery of the  $20,000,000  in aggregate  principal  amount of the Series F
Notes will be made at the offices of Chapman and Cutler, 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 August 27, 2002 or such later
date (not later than  August 31,  2002) as shall  mutually be agreed upon by the
Company and the Purchasers of the Series F Notes (the "Closing Date").

4. Prepayment of Notes.

         (a) Required  Prepayments.  No prepayments are required to be made with
respect to the Series F Notes prior to the expressed maturity date thereof other
than  prepayments  made in connection with an acceleration of the Series F 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 (a) such date, (b) the Section of this
Fourth  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

                                      -40-
<PAGE>

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 Fourth  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" shall mean with
respect to the Series F Notes in connection with any prepayment or acceleration,
the following:  the excess, if any, of (a) the aggregate present value as of the
date of such prepayment of each dollar of principal being prepaid and the amount
of interest (exclusive of interest accrued to the date of prepayment) that would
have been  payable  in respect of such  dollar if such  prepayment  had not been
made,  determined by discounting such amounts at the Reinvestment  Rate from the
respective  dates on which they would  have been  payable,  over (b) 100% of the
principal  amount  of the  outstanding  Series  F Notes  being  prepaid.  If the
Reinvestment  Rate is equal to or higher than 5.90%, the Make-Whole Amount shall
be zero.  For purposes of any  determination  of the  Make-Whole  Amount for the
Series F Notes, the following terms have the following meanings:

"Reinvestment  Rate" shall mean (1) the sum of 0.50%, plus the yield reported on
page "USD" of the  Bloomberg  Financial  Markets  Services  Screen  (or,  if not
available,  any other nationally  recognized  trading screen  reporting  on-line
intraday  trading  in the United  States  government  Securities)  at 10:00 A.M.
(Chicago,  Illinois  time) for the United States  government  Securities  have a
maturity  (rounded to the nearest month)  corresponding to the Remaining Life to
Maturity of the principal of the Notes being prepaid or (2) in the event that no
nationally  recognized  trading screen reporting on-line intraday trading in the
United States government  Securities is available,  Reinvestment Rate shall mean
0.50%,  plus the  arithmetic  mean of the yields for the two  columns  under the
heading "Week  Ending"  published in the  Statistical  Release under the caption
"Treasury  Constant  Maturities" for the maturity (rounded to the nearest month)
corresponding  to the Remaining Life to Maturity of the principal being prepaid.
If no maturity  exactly  corresponds to such Remaining Life to Maturity,  yields
for the published  maturity next longer than the Remaining  Life to Maturity and
for the  published  maturity  next shorter than the  Remaining  Life to Maturity
shall be  calculated  pursuant to the  immediately  preceding  sentence  and the
Reinvestment  Rate shall be  interpolated  from such  yields on a  straight-line
basis,  rounding in each of such relevant  periods to the nearest month. For the
purposes of  calculating

                                      -41-
<PAGE>

the Reinvestment  Rate, the most recent  Statistical  Release published prior to
the date of determination of the Make-Whole Amount shall be used.

"Statistical  Release" shall mean the then most recently  published  statistical
release designated  "H.15(519)" or any successor  publication which is published
weekly by the Federal  Reserve System and which  establishes  yields on actively
traded U.S.  Government  Securities  adjusted to constant maturities or, if such
statistical release is not published at the time of any determination hereunder,
then such other  reasonably  comparable  index which shall be  designated by the
Holders holding 66-2/3% in aggregate  principal amount of the outstanding Series
F  Notes,  subject  to  approval  of the  Company  which  approval  will  not be
unreasonably withheld.

"Remaining Life to Maturity" of the principal amount of the Series F Notes being
prepaid shall mean, as of the time of any determination  thereof,  the number of
years (calculated to the nearest one-twelfth) which will elapse between the date
of determination and the final maturity of the Series F Notes being prepaid.

5. Closing Conditions.

         (a) Conditions. The obligation of each Purchaser to purchase the Series
F 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 F 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 F 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 Fourth  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,
         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 F 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

                                      -42-
<PAGE>

         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 F 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 F Notes scheduled
         to be sold on the Closing Date pursuant to this Fourth Supplement.

                  (vi)  Satisfactory  Proceedings.   All  proceedings  taken  in
         connection   with  the   transactions   contemplated   by  this  Fourth
         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 F 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 F
         Notes.

         (b) The  obligation  of the  Company  to  deliver  the  Series  F Notes
hereunder  is  subject  to the  conditions  that (i) the  Commission  shall have
authorized  the  issuance  and sale by the  Company of the Series F 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 F Notes scheduled to be sold
on the Closing Date pursuant to this Fourth  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

                                      -43-
<PAGE>

Closing Date,  this Fourth  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  F 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 Fourth
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 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  F Notes  purchased  by such
Purchasers.

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.

                                      -44-
<PAGE>

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 /s/ Gerald F. Feeney
                    Title: Vice President, Chief Financial Officer and Treasurer

                                      -45-
<PAGE>

Accepted as of  August 15, 2002

                                     Sun Life Assurance Company of Canada


                                     By:

                                     Name:

                                     Title:


                                     By:

                                     Name:

                                     Title:



                                     Sun Life Assurance Company of Canada (U.S.)


                                     By:

                                     Name:

                                     Title:


                                     By:

                                     Name:

                                     Title:

                                      -46-
<PAGE>

                                     Sun Life Financial (Hong Kong) Limited


                                     By:

                                     Name:

                                     Title:


                                     By:

                                     Name:

                                     Title:

                                      -47-
<PAGE>

                       Information Relating to Purchasers

Name and Address of Purchaser                               Principal Amount of
                                                           Series F Notes to Be
                                                               Purchased

Sun Life Assurance Company of Canada                       $10,000,000
One Sun Life Park                                          $1,000,000
Wellesley Hills, Massachusetts  02481
Attention:  Investment Division/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

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,  5.90% Senior Series F Notes due 2017,  PPN
130789 M@ 6, principal, premium or interest") to:

Notices

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

Sun Life Assurance Company of Canada
One Sun Life Park
Wellesley Hills, Massachusetts  02481
Attention:  Manager, Securities Operations, SC #1395

All other notices and communications, including notices of non-routine payments,
to be addressed as first provided above.

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

Taxpayer I.D. Number:  38-1082080

                                   SCHEDULE A
                                (to Supplement)

<PAGE>

Name and Address of Purchaser                                   Principal Amount
                                                               of Series F Notes
                                                                 to be Purchased

Sun Life Assurance Company of Canada                                  $5,000,000
One Sun Life Park                                                     $2,000,000
Wellesley Hills, Massachusetts  02481
Attention:  Investment Division/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

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,  5.90% Senior Series F Notes due 2017,  PPN
130789 M@ 6, principal, premium or interest") to:

Bank of New York
P&I Department
ABA No.:  021-000-018
Account No.: IOC 566
Re:  California Water Service Company
For Further Credit:  IOC 566
Account No.:  275431

Notices

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

Sun Life Assurance Company of Canada
One Sun Life Park
Wellesley Hills, Massachusetts  02481
Attention:  Manager, Securities Operations, SC #1395

All other notices and communications, including notices of non-routine payments,
to be addressed as first provided above.

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

Taxpayer I.D. Number:  38-1082080

                                      A-2
<PAGE>

Name and Address of Purchaser                                Principal Amount of
                                                             Series F Notes
                                                             to Be Purchased~~

Sun Life Assurance Company of                                    $1,000,000
  Canada (U.S.)
One Sun Life Park
Wellesley Hills, Massachusetts  02481
Attention:  Investment Division/Private Placements, SC #1303
Telecopier Number: (617) 446-2392

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,  5.90% Senior Series F Notes due 2017,  PPN
130789 M@ 6, principal, premium or interest") to:

Chase Manhattan Bank
Private Placement Processing
ABA No.:  021-000-021
Account No.:  900-9-000200
Re:  California Water Service Company
Chase Account No.:  G07265

Notices

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

Sun Life Assurance Company of Canada (U.S.)
One Sun Life Park
Wellesley Hills, Massachusetts  02481
Attention:  Manager, Securities Operations, SC #1395

All other notices and communications, including notices of non-routine payments,
to be addressed as first provided above.

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

Taxpayer I.D. Number:  04-2461439

                                      A-3
<PAGE>

Name and Address of Purchaser                               Principal Amount of
                                                               Series F Notes
                                                              to Be Purchased

Sun Life Financial (Hong Kong) Limited                               $1,000,000
One Sun Life Park
Wellesley Hills, Massachusetts  02481
Attention:  Investment Division/Private Placements, SC #1303
Telecopier Number: (781) 446-2392

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,  5.90% Senior Series F Notes due 2017,  PPN
130789 M@ 6, principal, premium or interest") to:

         Citibank, N.A.
         Attention:  Gay Quitch
         ABA No.:  021-000-089
         Account No.:  36112805
         Re:  California Water Service Company
         For Further Credit:  849141

Notices

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

         Sun Life Financial (Hong Kong) Limited
         c/o Sun Life Assurance Company of Canada
         One Sun Life Park
         Wellesley Hills, Massachusetts  02481
         Attention:  Manager, Securities Operations, SC #1395

All other notices and communications, including notices of non-routine payments,
to be addressed as first provided above.

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

Taxpayer I.D. Number:  98-0347199

                                      A-4
<PAGE>

                             [Form of Series F 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

                           5.90% Series F Senior Note

                              Due November 1, 2017

                                PPN: 130789 M@ 6

No.                                                              August 27, 2002

$

         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, 2017,
                             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  5.90%  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
7.90% 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

                                    EXHIBIT 1

<PAGE>

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 a
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,  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 each Purchaser 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 F Notes. The issuance and sale
of the Series F Notes and the  execution  and delivery of the Fourth  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
June 30, 2002.

         5.  Financial  Statements  and Reports.  The Company has furnished each
Purchaser with a copy of its audited  financial  reports for 1999, 2000 and 2001
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 2001,  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, 2002,
and  Forms  10 Q for CWSG for the  fiscal  quarter  ended  June  30,  2002  (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

                                    EXHIBIT 2
<PAGE>

ordinary 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 at  December  31,  2001,  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,  2001,  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 2001 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

                                      E 2-2
<PAGE>

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  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

                                      E 2-4
<PAGE>

existed  at the  date of  repeal  of the  constitutional  provision  in 1911 and
probably also extends to territory  incorporated 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

                                      E 2-4
<PAGE>

and the City of Carson  Redevelopment  Project  #2,  as to which the  franchises
expired without renewal in, respectively,  1994 and 1998. Dominguez continued to
provide water services to Compton and the City of Carson  Redevelopment  Project
#2  subsequent  to the  expiration  of  the  respective  franchises,  and to pay
franchise fees, 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.

         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 Fourth Supplement or the Series F 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 F Notes.

                                      E 2-5
<PAGE>

         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  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 F Notes or the  execution,
delivery or performance of the Fourth  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 F 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 Fourth Supplement,  the consummation of the transactions therein
provided for and compliance with the provisions of the Fourth Supplement and the
Series F 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 F Notes  under the Fourth  Supplement  to  refinance
existing  Indebtedness  and  to  finance  a  portion  of the  Company's  general
construction  program.  None  of the  transactions  contemplated  in the  Fourth
Supplement (including, without limitation thereof, the use of the

                                      E 2-7
<PAGE>

proceeds from the sale of the Series F 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 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
F 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,  exceeded  as of
December 31, 2001, the last annual  valuation date, the actuarial  present value
of all benefits vested under the Plans by more than $10,898,000.

         (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 Fourth
Supplement  and  compliance by the Company with the  provisions  thereof and the
Series F 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.

                                      E 2-8
<PAGE>

         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 heath,
safety or the environment,  including, without 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 2001 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 Fourth
Supplement do not, nor does the Fourth  Supplement,  the Company  Information or
any written statement  (including without limitation the 2001 Company Report and
the 2001 CWSG  Report)  furnished by the Company to you in  connection  with the
negotiation of the sale of the Series F 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 Fourth  Supplement  or the Series F
Notes.

         22. Private Offering.  Neither the Company, directly or indirectly, nor
any agent on its  behalf  has  offered  or will  offer the Series F Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
F Notes or any similar  Security from or has otherwise  approached or negotiated
or will  approach or  negotiate  in respect of the Series F Notes or any similar
Security  with any  Person  other  than the  Purchasers.  Neither  the  Company,
directly  or  indirectly,  nor any agent on its behalf has offered or will offer
the Series F Notes or any similar  Security or has  solicited or will solicit an
offer to acquire the Series F Notes or any similar  Security  from any Person so
as to cause the  issuance  and sale of the Series F Notes not to be exempt  from
the provisions of Section 5 of the Securities Act of 1933, as amended.

                                     E 2-8
<PAGE>

                Current Debt, Funded Debt and Capitalized Leases
                               as of June 30, 2002

1.       Current Debt

         $24,000,000 borrowed under the Company's bank short-term line of credit
         with Bank of America.

2.       Funded Debt

         $111,865,000  outstanding  under the Company's  various series of First
         Mortgage Bonds with due dates ranging from 2002 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.

         $2, 818,000  California  Department of Water  Resources  Loans maturing
         2011 to 2032.

         $459,000 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.

                                     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 Fourth  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
Fourth  Supplement  and the Notes,  and the  performance  by the  Company of its
obligations  under the Note Agreement,  the Fourth 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 Fourth Supplement and the Notes.

         3. Each of the Note  Agreement,  the  Fourth  Supplement  and the Notes
constitutes a valid and binding  agreement of the Company,  enforceable  against
the Company in accordance with its terms.

         4. The execution and delivery by the Company of the Note Documents, and
compliance by the Company with the provisions  thereof (i) 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 Credit Agreement dated
as of July 31, 2001,  between the Company and Bank of America as  Administrative
Agent,  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,
2001.  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.

         5. Based upon the  representations set forth in Section 6 of the Fourth
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 Fourth 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 Fourth 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:

                                    EXHIBIT 3
                                 (to Supplement)
<PAGE>


         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:

                  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

                                      E 3-2
<PAGE>

         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
and the City of Carson  Redevelopment  Project  #2,  as to which the  franchises
expired  without renewal in,  respectively,  1994 and 1998; (b) to the Company's
knowledge, Dominguez continued to provide water services to Compton and the City
of  Carson  Redevelopment  Project  #2  subsequent  to  the  expiration  of  the
respective  franchises,  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.

         The opinion of Bingham  McCutchen  LLP shall  cover such other  matters
relating  to the sale of the  Series F Notes as the  Purchasers  may  reasonably
request.  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,  special  counsel to the Purchasers,
called for by Section  5(a)(iii)  of the Fourth  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 Fourth  Supplement  and to issue
the Series F Notes.

         2.  The  Note  Agreement  and the  Fourth  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 F 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 F Notes  under the
circumstances  contemplated by the Fourth Supplement do not, under existing law,
require the registration of the Series F 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 may rely upon the opinion of Bingham
McCutchen LLP as to matters of California law. The opinion of Chapman and Cutler
shall also state that the opinion of Bingham  McCutchen LLP is  satisfactory  in
scope and form to Chapman and Cutler 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 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.

         With  respect to  matters  of fact upon  which  such  opinion is based,
Chapman and Cutler 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 F
Notes.

                                    EXHIBIT 4
                                 (to Supplement)