CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

On April 17, 2009, Cal Water issued $100.0 million aggregate principal amount of 5.875% First Mortgage Bonds due 2019, and on November 17, 2010, Cal Water issued $100.0 million aggregate principal amount of 5.500% First Mortgage Bonds due 2040, all of which are fully and unconditionally guaranteed by the Company. As a result of these guarantee arrangements, the Company is required to present the following condensed consolidating financial information. The investments in affiliates are accounted for and presented using the “equity method” of accounting

The following tables present the condensed consolidating balance sheets as of December 31, 2016 and 2015, the condensed consolidating statements of income for the years ended December 31, 2016, 2015 and 2014, and the condensed consolidating statements of cash flows for the years ended December 31, 2016, 2015, and 2014, of (i) California Water Service Group, the guarantor of the First Mortgage Bonds and the parent company; (ii) California Water Service Company, the issuer of the First Mortgage Bonds and a 100% owned consolidated subsidiary of California Water Service Group; and (iii) the other 100% owned non-guarantor consolidated subsidiaries of California Water Service Group. No other subsidiary of the Company guarantees the securities. The condensed consolidating balance sheet as of December 31, 2015 reflects the retrospective adoption of ASU 2015-03 (refer to Note 2 Summary of Significant Accounting Policies for more details).

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2016



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
	ASSETS
Utility plant:
Utility plant	$	1,318		$	2,519,785		$	203,433		$	(7,197	)	$	2,717,339
Less accumulated depreciation and amortization	(826		)	(805,992		)	(53,163		)	1,919			(858,062		)
Net utility plant	492			1,713,793			150,270			(5,278		)	1,859,277
Current assets:
Cash and cash equivalents	5,216			13,215			7,061			—			25,492
Receivables and unbilled revenue	—			98,850			4,173			—			103,023
Receivables from affiliates	19,566			3,608			8			(23,182		)	—
Other current assets	80			12,442			1,032			—			13,554
Total current assets	24,862			128,115			12,274			(23,182		)	142,069
Other assets:
Regulatory assets	—			352,139			3,791			—			355,930
Investments in affiliates	666,525			—			—			(666,525		)	—
Long-term affiliate notes receivable	25,744			—			—			(25,744		)	—
Other assets	376			50,361			3,765			(33		)	54,469
Total other assets	692,645			402,500			7,556			(692,302		)	410,399
TOTAL ASSETS	$	717,999		$	2,244,408		$	170,100		$	(720,762	)	$	2,411,745
	CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	659,471		$	595,003		$	76,833		$	(671,836	)	$	659,471
Affiliate long-term debt	—			—			25,744			(25,744		)	—
Long-term debt, less current maturities	—			530,850			895			—			531,745
Total capitalization	659,471			1,125,853			103,472			(697,580		)	1,191,216
Current liabilities:
Current maturities of long-term debt	—			25,657			551			—			26,208
Short-term borrowings	57,100			40,000			—			—			97,100
Payables to affiliates	—			539			22,643			(23,182		)	—
Accounts payable	—			74,998			2,815			—			77,813
Accrued expenses and other liabilities	88			47,232			1,789			—			49,109
Total current liabilities	57,188			188,426			27,798			(23,182		)	250,230
Unamortized investment tax credits	—			1,798			—			—			1,798
Deferred income taxes	1,340			296,781			803			—			298,924
Pension and postretirement benefits other than pensions	—			222,691			—			—			222,691
Regulatory and other long-term liabilities	—			80,518			3,130			—			83,648
Advances for construction	—			181,907			541			—			182,448
Contributions in aid of construction	—			146,434			34,356			—			180,790
TOTAL CAPITALIZATION AND LIABILITIES	$	717,999		$	2,244,408		$	170,100		$	(720,762	)	$	2,411,745

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2015



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
	ASSETS
Utility plant:
Utility plant	$	1,318		$	2,313,704		$	199,121		$	(7,197	)	$	2,506,946
Less accumulated depreciation and amortization	(605		)	(758,362		)	(48,034		)	1,823			(805,178		)
Net utility plant	713			1,555,342			151,087			(5,374		)	1,701,768
Current assets:
Cash and cash equivalents	582			4,270			3,985			—			8,837
Receivables and unbilled revenue	—			100,777			3,728			—			104,505
Receivables from affiliates	19,677			26,219			—			(45,896		)	—
Other current assets	79			13,077			1,080						14,236
Total current assets	20,338			144,343			8,793			(45,896		)	127,578
Other assets:
Regulatory assets	—			358,254			3,639			—			361,893
Investments in affiliates	651,449			—			—			(651,449		)	—
Long-term affiliate notes receivable	25,099			—			—			(25,099		)	—
Other assets	758			45,544			4,616			(904		)	50,014
Total other assets	677,306			403,798			8,255			(677,452		)	411,907
TOTAL ASSETS	$	698,357		$	2,103,483		$	168,135		$	(728,722	)	$	2,241,253
	CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	642,155		$	581,792		$	75,024		$	(656,816	)	$	642,155
Affiliate long-term debt	—			—			25,099			(25,099		)	—
Long-term debt, less current maturities	—			507,034			968						508,002
Total capitalization	642,155			1,088,826			101,091			(681,915		)	1,150,157
Current liabilities:
Current maturities of long-term debt	—			5,654			389			—			6,043
Short-term borrowings	33,615			—			—			—			33,615
Payables to affiliates	21,500			667			23,729			(45,896		)	—
Accounts payable	—			63,814			2,566			—			66,380
Accrued expenses and other liabilities	102			40,173			1,585			—			41,860
Total current liabilities	55,217			110,308			28,269			(45,896		)	147,898
Unamortized investment tax credits	—			1,872			—			—			1,872
Deferred income taxes	985			264,823			—			(911		)	264,897
Pension and postretirement benefits other than pensions	—			236,266			—			—			236,266
Regulatory and other long-term liabilities	—			79,477			2,937			—			82,414
Advances for construction	—			179,630			542			—			180,172
Contributions in aid of construction	—			142,281			35,296			—			177,577
TOTAL CAPITALIZATION AND LIABILITIES	$	698,357		$	2,103,483		$	168,135		$	(728,722	)	$	2,241,253

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2016



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	570,514		$	38,856		$	—		$	609,370
Operating expenses:
Operations:
Purchased water	—			181,018			497			—			181,515
Purchased power	—			19,791			7,389			—			27,180
Pump taxes	—			11,298			—			—			11,298
Administrative and general	—			88,001			10,473			—			98,474
Other	—			73,918			6,669			(505		)	80,082
Maintenance	—			22,053			940			—			22,993
Depreciation and amortization	220			59,138			4,337			(96		)	63,599
Income tax (benefit) expense	(398		)	22,743			1,449			1,010			24,804
Property and other taxes	—			20,331			2,900			—			23,231
Total operating (income) expenses	(178		)	498,291			34,654			409			533,176
Net operating income	178			72,223			4,202			(409		)	76,194
Other income and expenses:
Non-regulated revenue	1,850			15,114			2,006			(2,385		)	16,585
Non-regulated expenses	—			(10,122		)	(1,323		)	—			(11,445		)
Loss on sale of non-utility properties	—			(146		)	—			—			(146		)
Income tax expense on other income and expenses	(754		)	(1,976		)	(254		)	972			(2,012		)
Net other income	1,096			2,870			429			(1,413		)	2,982
Interest:
Interest expense	757			32,682			1,906			(1,879		)	33,466
Less: capitalized interest	—			(2,905		)	(60		)	—			(2,965		)
Net interest expense	757			29,777			1,846			(1,879		)	30,501
Equity earnings of subsidiaries	48,158			—			—			(48,158		)	—
Net income	$	48,675		$	45,316		$	2,785		$	(48,101	)	$	48,675

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2015



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	552,202		$	36,166		$	—		$	588,368
Operating expenses:
Operations:
Purchased water	—			168,157			400			—			168,557
Purchased power	—			20,282			7,608			—			27,890
Pump taxes	—			11,479			—			—			11,479
Administrative and general	—			101,244			11,866			—			113,110
Other	—			61,154			6,599			(505		)	67,248
Maintenance	—			20,659			804			—			21,463
Depreciation and amortization	228			56,911			4,343			(101		)	61,381
Income tax (benefit) expense	(388		)	23,964			(56		)	1,008			24,528
Property and other taxes	—			18,848			2,711			—			21,559
Total operating (income) expenses	(160		)	482,698			34,275			402			517,215
Net operating income	160			69,504			1,891			(402		)	71,153
Other Income and Expenses:
Non-regulated revenue	1,787			14,460			1,699			(2,322		)	15,624
Non-regulated expenses	—			(12,870		)	(1,174		)	—			(14,044		)
Gain on sale of non-utility properties	—			315			—			—			315
Income tax expense on other income and expenses	(728		)	(776		)	(224		)	967			(761		)
Net other income	1,059			1,129			301			(1,355		)	1,134
Interest:
Interest expense	718			28,450			1,834			(1,817		)	29,185
Less: capitalized interest	—			(1,873		)	(42		)	—			(1,915		)
Net interest expense	718			26,577			1,792			(1,817		)	27,270
Equity earnings of subsidiaries	44,516			—			—			(44,516		)	—
Net income	$	45,017		$	44,056		$	400		$	(44,456	)	$	45,017

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2014



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	564,508		$	32,991		$	—		$	597,499
Operating expenses:
Operations:
Purchased water	—			177,561			323			—			177,884
Purchased power	—			24,089			9,070			—			33,159
Pump taxes	—			12,898			—			—			12,898
Administrative and general	66			87,130			10,177			—			97,373
Other	—			59,291			7,021			(505		)	65,807
Maintenance	—			19,141			713			—			19,854
Depreciation and amortization	214			56,836			4,274			(107		)	61,217
Income tax (benefit) expense	(275		)	27,286			(1,248		)	964			26,727
Property and other taxes	—			18,086			2,647			—			20,733
Total operating expenses	5			482,318			32,977			352			515,652
Net operating income (loss)	(5		)	82,190			14			(352		)	81,847
Other Income and Expenses:
Non-regulated revenue	1,811			16,085			1,592			(2,170		)	17,318
Non-regulated expenses	—			(13,086		)	(1,199		)	—			(14,285		)
Gain on sale of non-utility properties				51									51
Income tax expense on other income and expenses	(738		)	(1,243		)	(184		)	920			(1,245		)
Net other income	1,073			1,807			209			(1,250		)	1,839
Interest:
Interest expense
Less: capitalized interest	—			(1,460		)	(75		)	—			(1,535		)
Net interest expense	394			26,317			1,903			(1,666		)	26,948
Equity earnings of subsidiaries	56,064			—			—			(56,064		)	—
Net income (loss)	$	56,738		$	57,680		$	(1,680	)	$	(56,000	)	$	56,738

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2016



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	48,675		$	45,316		$	2,785		$	(48,101	)	$	48,675
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(48,158		)	—			—			48,158			—
Dividends received from affiliates	33,081			—			—			(33,081		)	—
Depreciation and amortization	220			60,572			4,507			(96		)	65,203
Amortization of debt premium	—			871			—			—			871
Change in deferred income taxes	—			26,818			—			—			26,818
Change in value of life insurance contract	—			(1,026		)	—			—			(1,026		)
Stock-based compensation	2,849			—			—			—			2,849
Loss on sale of non-utility properties	—			146			—			—			146
Write-off of capital costs	—			3,221			—			—			3,221
Changes in operating assets and liabilities	(14		)	6,534			261			—			6,781
Other changes in noncurrent assets and liabilities	(389		)	4,645			1,867			39			6,162
Net cash provided by operating activities	36,264			147,097			9,420			(33,081		)	159,700
Investing activities:
Utility plant expenditures	—			(224,378		)	(4,560		)	—			(228,938		)
Proceeds from sale of non-utility assets	—			395			—			—			395
Change in affiliate advances	291			1,111			(67		)	(1,335		)	—
Collection of affiliate short-term borrowings	365			42,100			—			(42,465		)	—
Issuance of affiliate short-term borrowings	(2,365		)	(20,600		)	—			22,965			—
Collection of affiliate long-term debt	1,175			—			—			(1,175		)	—
Life insurance benefits	—			495			—			—			495
Purchase of life insurance	—			(2,857		)	—			—			(2,857		)
Changes in restrict cash	—			66			—			—			66
Net cash used in investing activities	(534		)	(203,668		)	(4,627		)	(22,010		)	(230,839		)
Financing Activities:
Short-term borrowings	44,100			101,000			—			—			145,100
Repayment of short-term borrowings	(20,615		)	(61,000		)	—			—			(81,615		)
Change in affiliate advances	—			(128		)	(1,207		)	1,335			—
Proceeds from affiliate short-term borrowings	20,600			—			2,365			(22,965		)	—
Repayment of affiliate short-term borrowings	(42,100		)	—			(365		)	42,465			—
Repayment of affiliates long-term debt	—			—			(1,175		)	1,175			—
Issuance of long term debt, net of expenses	—			49,823			—			—			49,823
Advances and contribution in aid of construction	—			21,329			119			—			21,448
Refunds of advances for construction	—			(6,855		)	(30		)	—			(6,885		)
Repayment of long-term debt	—			(6,548		)	(448		)	—			(6,996		)
Dividends paid to non-affiliates	(33,081		)	—			—			—			(33,081		)
Dividends paid to affiliates	—			(32,105		)	(976		)	33,081			—
Net cash provided by (used in) financing activities	(31,096		)	65,516			(1,717		)	55,091			87,794
Change in cash and cash equivalents	4,634			8,945			3,076			—			16,655
Cash and cash equivalents at beginning of period	582			4,270			3,985			—			8,837
Cash and cash equivalents at end of year	$	5,216		$	13,215		$	7,061		$	—		$	25,492

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2015



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	45,017		$	44,056		$	400		$	(44,456	)	$	45,017
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(44,516		)	—			—			44,516			—
Dividends received from affiliates	32,066			—			—			(32,066		)	—
Depreciation and amortization	228			58,385			4,670			(101		)	63,182
Change in value of life insurance contracts	—			218			—			—			218
Stock-based compensation	2,578			—			—			—			2,578
(Gain) on sale of non-utility properties	—			(315		)	—			—			(315		)
Changes in deferred income taxes	—			24,393			—			—			24,393
Changes in operating assets and liabilities	(758		)	(6,417		)	5,392			(94		)	(1,877		)
Other changes in noncurrent assets and liabilities	1,436			14,807			(4,943		)	135			11,435
Net cash provided by operating activities	36,051			135,127			5,519			(32,066		)	144,631
Investing activities:
Utility plant expenditures	—			(171,645		)	(5,188		)	—			(176,833		)
Proceeds from sale of non-utility assets	—			319			—			—			319
Investment in affiliates	(1,000		)	—			—			1,000			—
Change in affiliate advances	(239		)	(1,111		)	115			1,235			—
Issuance of affiliate short-term borrowings	(3,280		)	(21,500		)	—			24,780			—
Collection of affiliate short-term borrowings	3,000			—			—			(3,000		)	—
Collection of affiliate-long term debt	1,007			—			—			(1,007		)	—
Purchase of life insurance contracts	—			(2,032		)	—			—			(2,032		)
Changes in Restricted cash	—			288			—			—			288
Net cash used in investing activities	(512		)	(195,681		)	(5,073		)	23,008			(178,258		)
Financing Activities:
Short-term borrowings, net of expenses	15,101			79,202			—			—			94,303
Repayment of short-term borrowings	(43,600		)	(97,400		)	—			—			(141,000		)
Investment from affiliates	—			—			1,000			(1,000		)	—
Change in affiliate advances	—			397			838			(1,235		)	—
Proceeds from affiliate short-term borrowings	21,500			—			3,280			(24,780		)	—
Repayment of affiliate short-term borrowings	—			—			(3,000		)	3,000			—
Repayment of affiliate long-term debt	—			—			(1,007		)	1,007			—
Proceeds from long-term debt	—			99,293			50			—			99,343
Advances and contributions in aid for construction	—			14,195			1,831			—			16,026
Refunds of advances for construction	—			(6,681		)	(45		)	—			(6,726		)
Repayment of long-term debt	—			(6,528		)	(475		)	—			(7,003		)
Dividends paid to non-affiliates	(32,066		)	—			—			—			(32,066		)
Dividends paid to affiliates	—			(31,583		)	(483		)	32,066			—
Net cash provided by (used in) financing activities	(39,065		)	50,895			1,989			9,058			22,877
Change in cash and cash equivalents	(3,526		)	(9,659		)	2,435			—			(10,750		)
Cash and cash equivalents at beginning of period	4,108			13,929			1,550			—			19,587
Cash and cash equivalents at end of year	$	582		$	4,270		$	3,985		$	—		$	8,837

California Water Service Group

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2014



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income (loss)	$	56,738		$	57,680		$	(1,680	)	$	(56,000	)	$	56,738
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of subsidiaries	(56,064		)	—			—			56,064			—
Dividends received from affiliates	31,063			—			—			(31,063		)	—
Depreciation and amortization	214			58,657			4,558			(107		)	63,322
Change in value of life insurance contracts	—			(994		)	—			—			(994		)
Stock-based compensation	2,195			—			—			—			2,195
(Gain) on sale of non-utility properties	—			(51		)	—			—			(51		)
Changes in deferred income taxes	—			34,125			—			—			34,125
Changes in operating assets and liabilities	16			(11,803		)	(894		)	—			(12,681		)
Other changes in noncurrent assets and liabilities	789			(15,596		)	243			43			(14,521		)
Net cash provided by operating activities	34,951			122,018			2,227			(31,063		)	128,133
Investing activities:
Utility plant expenditures	—			(125,048		)	(6,967		)	—			(132,015		)
Proceeds from sale of non-utility assets	—			57			—			—			57
Investment in affiliates	(47,650		)	—			—			47,650			—
Change in affiliate advances	(3,200		)	2,147			(80		)	1,133			—
Collection of affiliate long-term debt	938			—			—			(938		)	—
Purchase of life insurance contracts	—			(3,207		)	—			—			(3,207		)
Changes in Restricted cash	—			396			—			—			396
Net cash used in investing activities	(49,912		)	(125,655		)	(7,047		)	47,845			(134,769		)
Financing Activities:
Short-term borrowings	64,900			52,400			—			—			117,300
Repayment of short-term borrowings	(20,000		)	(65,000		)	—			—			(85,000		)
Investment from affiliates	—			42,000			5,650			(47,650		)	—
Change in affiliate advances	(48		)	270			911			(1,133		)	—
Repayment of affiliate long-term debt	—			—			(938		)	938			—
Proceeds from long-term debt	—			—			497			—			497
Repayment of long-term debt	—			(6,934		)	(1,771		)	—			(8,705		)
Advances and contributions in aid for construction	—			11,219			1,110			—			12,329
Refunds of advances for construction	—			(6,529		)	(112		)	—			(6,641		)
Dividends paid to non-affiliates	(31,063		)	—			—			—			(31,063		)
Dividends paid to affiliates	—			(30,650		)	(413		)	31,063			—
Net cash provided by (used in) financing activities	13,789			(3,224		)	4,934			(16,782		)	(1,283		)
Change in cash and cash equivalents	(1,172		)	(6,861		)	114			—			(7,919		)
Cash and cash equivalents at beginning of period	5,280			20,790			1,436			—			27,506
Cash and cash equivalents at end of year	$	4,108		$	13,929		$	1,550		$	—		$	19,587