Exhibit 4.18

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                        CALIFORNIA WATER SERVICE COMPANY

                       TENTH SUPPLEMENT TO NOTE AGREEMENT

                          Dated as of February 15, 2003

                   Re: $10,000,000 5.48% Series L Senior Notes
                                Due March 1, 2018

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                                      162
<PAGE>

                       TENTH SUPPLEMENT TO NOTE AGREEMENT

                                                                     Dated as of
                                                               February 15, 2003

To the Purchaser named in
Schedule A hereto

Ladies and Gentlemen:

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

         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 Purchaser named on Schedule A hereto
as follows:

         1. The  Company  has  authorized  the  issue  and  sale of  $10,000,000
aggregate  principal amount of its 5.48% Series L Senior Notes due March 1, 2018
(the  "Series L Notes").  The Series L 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 15, 2002,  the Series H Notes issued  pursuant to the Sixth
Supplement to Note  Agreement  dated as of December 1, 2002,  the Series K Notes
being issued  pursuant to the Ninth  Supplement  to Note  Agreement  dated as of
February  15,  2003  concurrently  with these  Series L Notes 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 L 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 Purchaser 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

                                      163
<PAGE>

to issue and sell to the  Purchaser,  and the Purchaser  agrees to purchase from
the  Company,  Series L Notes in the  principal  amount set forth  opposite  the
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  $10,000,000  in aggregate  principal  amount of the
Series L 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 February 28, 2003 or
such later date (not later than March 5, 2003) as shall  mutually be agreed upon
by the Company and the Purchaser of the Series L Notes (the "Closing Date").

         4. Prepayment of Notes.

         (a) Required  Prepayments.  No prepayments are required to be made with
respect to the Series L Notes prior to the expressed maturity date thereof other
than  prepayments  made in connection with an acceleration of the Series L 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
Tenth  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

                                      164
<PAGE>

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 Tenth  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 L 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 L 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 L Note, the amount  obtained by discounting all Remaining
         Scheduled  Payments  with respect to such Called  Principal  from their
         respective  scheduled due dates to the 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  L  Notes  is  payable)  equal  to the
         Reinvestment Yield with respect to such Called Principal.

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<PAGE>


                  "Reinvestment   Yield"  means,  with  respect  to  the  Called
         Principal  of any  Series L 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 L 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 L 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 L Note, the date on which such Called  Principal is to be
         prepaid pursuant to Section 4(b) 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.

                                      166
<PAGE>

         5. Closing Conditions.

         (a) Conditions. The obligation of the Purchaser to purchase the Series
L 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 L 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 L 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 Tenth  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  Purchaser,  their  opinions dated the Closing
         Date,  in  form  and  substance  satisfactory  to such  Purchaser,  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 L 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 L Notes
         shall have been  fulfilled.  The Company  shall have  delivered  to the
         Purchaser  and its 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 L Notes scheduled
         to be sold on the Closing Date pursuant to this Tenth Supplement.

                  (vi)  Satisfactory  Proceedings.   All  proceedings  taken  in
         connection with the transactions contemplated by this Tenth Supplement,
         and all  documents  necessary  to the  consummation  thereof,  shall be
         satisfactory in form and substance to such Purchaser and

                                      167
<PAGE>

                  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 L Notes shall (a) be permitted by the laws
         and regulations of each jurisdiction to which the 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  the
         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 the 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 the 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 Purchaser's  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 L
         Notes.

         (b) The  obligation  of the  Company  to  deliver  the  Series  L Notes
hereunder  is  subject  to the  conditions  that (i) the  Commission  shall have
authorized  the  issuance  and sale by the  Company of the Series L 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 L Notes scheduled to be sold
on the Closing Date pursuant to this Tenth  Supplement  shall have been tendered
by the Purchaser. If the condition specified in this Section 5(b) shall not have
been fulfilled  prior to or on the Closing Date,  this Tenth  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 the Purchaser
the  Series  L Notes  to be  issued  to the  Purchaser  on  such  date or if the
conditions specified in Section 5(a) have not been fulfilled,  the Purchaser may
thereupon  elect to be  relieved  of all  further  obligations  under this Tenth
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 the Purchaser's  rights
against the Company.

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<PAGE>


         6. The 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  L  Notes  purchased  by the
Purchaser.

         7. The Company and the 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.

                                      169
<PAGE>


California Water Service Company
Tenth Supplement


         The execution  hereof shall  constitute a contract  between the Company
and the  Purchaser  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:    Gerald F. Feeney
                                   Title:   Vice President, Chief Financial
                                            Officer and Treasurer

                                      170
<PAGE>

California Water Service Company
Tenth Supplement

Accepted as of February 15, 2003
                                        AMERICAN GENERAL LIFE AND ACCIDENT
                                              INSURANCE COMPANY

                                              By: AIG Global Investment Corp.



                                              By
                                                 Name:  Sarah Helmich
                                                 Title:  Vice President

                                      171
<PAGE>

                      INFORMATION RELATING TO THE PURCHASER

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

AMERICAN GENERAL LIFE AND ACCIDENT                             $10,000,000
INSURANCE COMPANY
c/o AIG Global Investment Corporation
P.O. Box 3247
Houston, Texas  77253-3247
Attention:  Private Placement Department, A36-04
Fax Number:  (713) 831-1072
Overnight Mailing Address:
2929 Allen Parkway, A36-04
Houston, Texas  77019-2155

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,  5.48% Senior Notes,  Series L, due March 1,
2018, PPN 130789 P@ 3, principal or interest") to:

Notices

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

         American General Life and Accident Insurance Company and PA 10
         c/o State Street Bank and Trust Company
         Insurance Services
         801 Pennsylvania
         Kansas City, Missouri  64105
         Facsimile Number:  (816) 691-3619

Duplicate  payment  notices and all other  correspondences  to be  addressed  to
American General Life and Accident Insurance Company and PA 10 as first provided
above with a copy to:

         AIG Global Investment Corporation
         Legal Department - Investment Management
         2929 Allen Parkway, Suite A36-01
         Houston, Texas  77019-2155
         Facsimile Number:  (713) 831-2328

Name of Nominee in which Notes are to be issued:  None
Taxpayer I.D. Number:  62-0306330


                                   SCHEDULE A
                                 (to Supplement)

<PAGE>

                             [FORM OF SERIES L 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

                           5.48% Series L Senior Note
                                Due March 1, 2018

                                PPN: 130789 P@ 3
No.                                                            February 28, 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 March, 2018,
                             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  5.48%  per  annum  from  the  date  hereof  until  maturity,   payable
semiannually  on the  first  day of  each  March  and  September  in  each  year
(commencing  on the second 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 7.48% 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 Tenth Supplement (the "Tenth  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 Purchaser  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

                                    EXHIBIT 1
                                 (to Supplement)

<PAGE>

         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 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 L Notes. The issuance and sale
of the Series L Notes and the  execution  and  delivery of the Tenth  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.  The 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
December 31, 2002.

         5.  Financial  Statements  and Reports.  The Company has  furnished the
Purchaser with a copy of its audited  financial  reports for 1999, 2000 and 2001
and a copy of its unaudited  financial  report for 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 2001, together with all reports or documents required to
be filed by CWSG pursuant to Section 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 the Purchaser with an unaudited  quarterly financial statement for the
Company for the fiscal quarter ended September 30, 2002, and Forms 10-Q for CWSG
for the fiscal quarter ended September 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.

                                    EXHIBIT 2
                                 (to supplement)

<PAGE>


         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 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, 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
title

                                     E-2-2
<PAGE>


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

                                     E-2-3
<PAGE>


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 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


                                     E-2-4
<PAGE>

         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 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 Tenth Supplement or the Series L 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 holder of the Series L 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 L Notes or the  execution,
delivery or performance of the Tenth 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 L 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 Tenth Supplement,  the consummation of the transactions  therein
provided for and compliance with the provisions of the Tenth  Supplement and the
Series L 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 L Notes  under the Tenth  Supplement  to  refinance
existing   Indebtedness  and  for  general  corporate  purposes.   None  of  the
transactions contemplated in the Tenth Supplement (including, without limitation
thereof,  the use of the  proceeds  from  the sale of the  Series L 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.

                                     E-2-6
<PAGE>

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 L 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 Tenth
Supplement  and  compliance by the Company with the  provisions  thereof and the
Series L 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 heath,
safety or the environment, including,

                                     E-2-7
<PAGE>


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 Tenth
Supplement do not, nor does the Tenth 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 L 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 Tenth  Supplement  or the  Series L
Notes.

         22. Private Offering.  Neither the Company, directly or indirectly, nor
any agent on its  behalf  has  offered  or will  offer the Series L Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
L Notes or any similar  Security from or has otherwise  approached or negotiated
or will  approach or  negotiate  in respect of the Series L Notes or any similar
Security  with any  Person  other than the  Purchaser  and not more than 1 other
institutional  investor,  who was  offered  a portion  of the  Series L 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 L Notes or any
similar Security or has solicited or will solicit an offer to acquire the Series
L Notes or any similar  Security from any Person so as to cause the issuance and
sale of the Series L 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 DECEMBER 31, 2002


1.       Current Debt

         $34,000,000 borrowed under the Company's bank short-term line of credit
         with Bank of America.

2.       Funded Debt

         $75,700,000 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.

         $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.


                                     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 Tenth Supplement, shall be dated
the Closing Date and addressed to the Purchaser,  shall be satisfactory in scope
and form to the Purchaser 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 Tenth  Supplement and the Notes, and the performance by
         the  Company of its  obligations  under the Note  Agreement,  the Tenth
         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 Tenth Supplement and the Notes.

                  3. Each of the Note  Agreement,  the Tenth  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 Tenth Supplement and the Notes would recognize
         and give effect to the choice of law  provisions  set forth in the Note
         Agreement, the Tenth 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
         (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 Tenth  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 Tenth  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 Tenth
         Supplement  or an indenture  under the Trust  Indenture Act of 1939, as
         amended.

                                    EXHIBIT 3
                                 (to Supplement)
<PAGE>


                  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:

                  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,  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.

         The opinion of Bingham  McCutchen  LLP shall  cover such other  matters
relating  to the  sale of the  Series L Notes as the  Purchaser  may  reasonably
request and shall  provide  that  Chapman and Cutler 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,  special  counsel to the
Purchaser,  called for by Section  5(a)(iii) of the Tenth  Supplement,  shall be
dated the Closing Date and addressed to the Purchaser,  shall be satisfactory in
form and substance to the Purchaser 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
         Tenth Supplement and to issue the Series L Notes.

                  2. The Note Agreement and the Tenth  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  L 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 L Notes under
         the  circumstances  contemplated by the Tenth  Supplement do not, under
         existing law,  require the registration of the Series L 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 Purchaser
is 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
Purchaser  delivered  in  connection  with the issuance and sale of the Series L
Notes.

                                    EXHIBIT 4
                                 (to Supplement)