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, 2017 and 2016, the condensed consolidating statements of income for the years ended December 31, 2017, 2016, and 2015, and the condensed consolidating statements of cash flows for the years ended December 31, 2017, 2016, and 2015, 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 statement of cash flows for the years ended December 31, 2016 and 2015 reflect the retrospective adoption of ASU 2016-09 (refer to Note 2 Summary of Significant Accounting Policies for more details).

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2017



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
	ASSETS
Utility plant:
Utility plant	$	1,321		$	2,771,259		$	204,795		$	(7,196	)	$	2,970,179
Less accumulated depreciation and amortization	(919		)	(868,762		)	(54,543		)	2,010			(922,214		)
Net utility plant	402			1,902,497			150,252			(5,186		)	2,047,965
Current assets:
Cash and cash equivalents	4,728			80,940			9,108			—			94,776
Receivables and unbilled revenue	—			110,928			4,526			—			115,454
Receivables from affiliates	19,952			4,093			43			(24,088		)	—
Other current assets	80			16,569			994			—			17,643
Total current assets	24,760			212,530			14,671			(24,088		)	227,873
Other assets:
Regulatory assets	—			397,333			3,814			—			401,147
Investments in affiliates	698,690			—			—			(698,690		)	—
Long-term affiliate notes receivable	26,441			—			—			(26,441		)	—
Other assets	192			59,581			3,822			(205		)	63,390
Total other assets	725,323			456,914			7,636			(725,336		)	464,537
TOTAL ASSETS	$	750,485		$	2,571,941		$	172,559		$	(754,610	)	$	2,740,375
	CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	693,462		$	626,300		$	77,647		$	(703,947	)	$	693,462
Affiliate long-term debt	—			—			26,441			(26,441		)	—
Long-term debt, less current maturities	—			514,952			841			—			515,793
Total capitalization	693,462			1,141,252			104,929			(730,388		)	1,209,255
Current liabilities:
Current maturities of long-term debt	—			15,598			322			—			15,920
Short-term borrowings	55,100			220,000			—			—			275,100
Payables to affiliates	—			580			23,508			(24,088		)	—
Accounts payable	—			90,561			3,394			—			93,955
Accrued expenses and other liabilities	271			104,002			1,711			—			105,984
Total current liabilities	55,371			430,741			28,935			(24,088		)	490,959
Unamortized investment tax credits	—			1,724			—			—			1,724
Deferred income taxes	1,652			189,004			2,424			(134		)	192,946
Pension and postretirement benefits other than pensions	—			252,141			—			—			252,141
Regulatory and other long-term liabilities	—			220,779			3,348			—			224,127
Advances for construction	—			181,979			523			—			182,502
Contributions in aid of construction	—			154,321			32,400			—			186,721
TOTAL CAPITALIZATION AND LIABILITIES	$	750,485		$	2,571,941		$	172,559		$	(754,610	)	$	2,740,375

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 STATEMENT OF INCOME

For the Year Ended December 31, 2017



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	626,381		$	40,509		$	—		$	666,890
Operating expenses:
Operations:
Purchased water	—			198,682			399			—			199,081
Purchased power	—			21,021			7,841			—			28,862
Pump taxes	—			13,924			—			—			13,924
Administrative and general	—			92,195			10,719			—			102,914
Other	—			67,069			7,903			(524		)	74,448
Maintenance	—			21,595			935			—			22,530
Depreciation and amortization	94			72,327			4,453			(91		)	76,783
Income tax (benefit) expense	(498		)	27,129			1,238			1,059			28,928
Property and other taxes	(4		)	21,778			3,023			—			24,797
Total operating (income) expenses	(408		)	535,720			36,511			444			572,267
Net operating income	408			90,661			3,998			(444		)	94,623
Other income and expenses:
Non-regulated revenue	1,985			14,608			1,814			(2,509		)	15,898
Non-regulated expenses	—			(8,139		)	(1,251		)	—			(9,390		)
Allowance for equity funds used during construction	—			3,750			—			—			3,750
Gain on non-utility properties	—			663			—			—			663
Income tax expense on other income and expenses	(809		)	(4,434		)	(214		)	1,022			(4,435		)
Net other income	1,176			6,448			349			(1,487		)	6,486
Interest:
Interest expense	1,131			35,116			2,026			(1,985		)	36,288
Allowance for borrowed funds used during construction	—			(2,319		)	(41		)	—			(2,360		)
Net interest expense	1,131			32,797			1,985			(1,985		)	33,928
Equity earnings of subsidiaries	66,728			—			—			(66,728		)	—
Net income	$	67,181		$	64,312		$	2,362		$	(66,674	)	$	67,181

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		)
Gain 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
Allowance for borrowed funds used during construction	—			(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 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
Allowance for borrowed funds used during construction	—			(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 (loss)	$	45,017		$	44,056		$	400		$	(44,456	)	$	45,017

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2017



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	67,181		$	64,312		$	2,362		$	(66,674	)	$	67,181
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(66,728		)	—			—			66,728			—
Dividends received from Affiliates	34,563			—			—			(34,563		)	—
Depreciation and amortization	94			74,041			4,548			(91		)	78,592
Change in value of life insurance contract	—			(3,058		)	—			—			(3,058		)
Stock-based compensation	3,118			—			—			—			3,118
Gain on sale of non-utility properties	—			(663		)	—			—			(663		)
Changes in normalized deferred income taxes	—			21,087			—			—			21,087
Allowance for equity funds used during construction	—			(3,750		)	—			—			(3,750		)
Changes in operating assets and liabilities	184			(36,611		)	38			—			(36,389		)
Other changes in noncurrent assets and liabilities	254			18,860			2,573			37			21,724
Net cash provided by operating activities	38,666			134,218			9,521			(34,563		)	147,842
Investing activities:
Utility plant expenditures	(4		)	(252,055		)	(7,135		)	—			(259,194		)
TCP settlement proceeds	—			56,004			—			—			56,004
Proceeds from sale of non-utility assets	—			666			—			—			666
Change in affiliate advances	172			(485		)	(50		)	363			—
Issuance of affiliate short-term borrowings	(2,610		)	—			—			2,610			—
Reduction of affiliate long-term debt	1,356			—			—			(1,356		)	—
Life insurance benefits	—			1,558			—			—			1,558
Purchase of life insurance	—			(5,605		)	—			—			(5,605		)
Change in restricted cash	—			(81		)	—			—			(81		)
Net cash used in investing activities	(1,086		)	(199,998		)	(7,185		)	1,617			(206,652		)
Financing Activities:
Short-term borrowings, net of expenses	—			265,000			—			—			265,000
Repayment of short-term borrowings	(2,000		)	(85,000		)	—			—			(87,000		)
Change in affiliate advances	—			41			322			(363		)	—
Proceeds from affiliate short-term borrowings	—			—			2,610			(2,610		)	—
Repayment of affiliates long-term debt	—			—			(1,356		)	1,356			—
Retirement of long-term debt	—			(26,223		)	(606		)	—			(26,829		)
Advances and contribution in aid of construction	—			21,075			294			—			21,369
Refunds of advances for construction	—			(8,373		)	(5		)	—			(8,378		)
Repurchase of common stock	(1,505		)	—			—			—			(1,505		)
Dividends paid to non-affiliates	(34,563		)	—			—			—			(34,563		)
Dividends paid to affiliates	—			(33,015		)	(1,548		)	34,563			—
Net cash provided by (used in) financing activities	(38,068		)	133,505			(289		)	32,946			128,094
Change in cash and cash equivalents	(488		)	67,725			2,047			—			69,284
Cash and cash equivalents at beginning of period	5,216			13,215			7,061			—			25,492
Cash and cash equivalents at end of year	$	4,728		$	80,940		$	9,108		$	—		$	94,776

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
Changes in normalized deferred income taxes	—			26,818			—			—			26,818
Change in value of life insurance contracts	—			(1,026		)	—			—			(1,026		)
Stock-based compensation	2,849			—			—			—			2,849
(Gain) 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	355			4,645			1,867			39			6,906
Net cash provided by operating activities	37,008			147,097			9,420			(33,081		)	160,444
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		)
Change in restricted 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		)
Retirement of long-term debt	—			(6,548		)	(448		)	—			(6,996		)
Repurchase of common stock	(744		)	—			—			—			(744		)
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	(31,840		)	65,516			(1,717		)	55,091			87,050
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 normalized 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	1,774			14,807			(4,943		)	135			11,773
Net cash provided by operating activities	36,389			135,127			5,519			(32,066		)	144,969
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			—
Issuance of affiliate short-term borrowings	(3,280		)	(21,500		)	—			24,780			—
Collection of affiliate short-term borrowings	3,000			—			—			(3,000		)	—
Change in affiliate advances	(239		)	(1,111		)	115			1,235			—
Collection of affiliate long-term debt	1,007			—			—			(1,007		)	—
Purchase of life insurance	—			(2,032		)	—			—			(2,032		)
Change 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
Retirement of long-term debt	—			(6,528		)	(475		)	—			(7,003		)
Advances and contributions in aid of construction	—			14,195			1,831			—			16,026
Refunds of advances for construction	—			(6,681		)	(45		)	—			(6,726		)
Repurchase of common stock	(338		)	—			—			—			(338		)
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	(39,403		)	50,895			1,989			9,058			22,539
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