California Water Service Group
California Water Service Group is a regulated water utility holding company based in San Jose, California, with roots dating back to 1926 through its operating company Cal Water. Its core business is the production, purchase, treatment, storage, distribution, and sale of water for domestic, industrial, public, and irrigation uses, along with some wastewater collection and treatment services. The company serves approximately two million people through regulated districts in California and additional operations in other western U.S. markets. It also earns non-regulated revenue from municipal system operations, billing, meter reading, lab services, antenna-site leases, and other water-related contracts.
Fiscal year 2025 · change from previous year
Development 2020–2025
Business
Share of revenueCore CPUC-regulated water supply, treatment, storage, distribution, and fire-protection service to residential, commercial, industrial, and public customers.
Collection, treatment, and recycling services provided in selected service areas and through utility development projects.
Operation and maintenance of municipally owned or privately owned water systems, including billing and customer service work.
Revenue from operating leased systems such as the City of Hawthorne and City of Commerce under lease arrangements.
Communication antenna-site leases, lab services, and other utility-related services outside regulated tariffs.
Products
Reported · share of revenue- Residential58.7 %
- Business19.9 %
- Multiple Residential8.7 %
- Public Authorities5.7 %
- Industrial3.2 %
- Other3.8 %
Source: 10-K FY2025, revenue the company reports per product line (SEC XBRL). Shares are of the lines shown and add up to 100 %.
Customers
The company primarily serves end users of water within its regulated service areas, including households, businesses, public institutions, industrial users, and irrigation customers. In California, most revenue comes from regulated customer connections across 20 districts, where rates are set by the CPUC and designed to recover utility costs and earn an allowed return. The non-regulated business serves municipalities and private companies that outsource full system operations, meter reading, billing, or related utility functions. Fire protection and reliability are also important customer needs, so infrastructure investment is tied directly to service quality and public safety.
Households, businesses, industrial users, and public entities in CPUC-regulated districts buying essential water service and fire-protection capacity.
Cities and public agencies that outsource operation, maintenance, billing, and customer service for owned water systems.
Customers served through the City of Hawthorne and City of Commerce lease arrangements, where the company operates the systems and keeps customer billings.
Private companies and other non-utility counterparties buying water-related support services such as lab work and system services.
Strategy
The company’s strategy is centered on expanding its regulated and non-regulated water and wastewater footprint in the western United States while continuing to invest heavily in existing systems. Management is pursuing acquisitions, lease arrangements, utility development investments, and full-service operating contracts to broaden the customer base and diversify revenue sources. A major priority is capital investment in water quality, pipeline replacement, metering, cybersecurity, and resilience projects so the regulated asset base can support future rate recovery. The company is also pushing rate-case and revenue-decoupling initiatives, including the Low-Use Water Equity Program, to improve affordability, conservation alignment, and recovery of authorized revenue.
Adds regulated and contract-based growth opportunities beyond California and reduces reliance on a single state.
Pipeline replacement, water quality upgrades, and metering investments support reliability and future rate base growth.
Regulated utilities depend on timely approval of rates to recover costs and earn allowed returns.
Geography
California is the company’s dominant market, accounting for about 89.0% of customer connections and 91.2% of consolidated operating revenue in 2025. The regulated footprint spans 20 separate CPUC districts, making the business highly exposed to California water policy, drought conditions, and rate-case outcomes. Outside California, the company is expanding in the western United States through acquisitions and contracts, including planned Nevada and Oregon water and wastewater system purchases. Hawaii is also part of the broader operating footprint through Hawaii Water Service, which adds another regulated utility market with its own rate-case cycle.
Risks
The business is highly dependent on regulatory approvals, because most revenue comes from rates set by public utility commissions and delayed or unfavorable decisions can defer cost recovery. Water supply risk is material: drought, rainfall variability, reservoir levels, groundwater availability, water quality, and legal restrictions can all reduce supply or customer usage and hurt earnings. The company also faces cybersecurity and technology risk because critical utility operations and customer data depend on systems that may be targeted by increasingly sophisticated attacks. In addition, the company is exposed to seasonality, wildfire/power outage disruptions, municipal counterparty credit risk, and the need to fund large capital programs before rate recovery is fully realized.
- Regulatory recovery riskImpact: HighLikelihood: Medium
Most revenue depends on CPUC and other commission-approved rates, so delays or disallowances can leave costs unrecovered.
Exposure: California regulated operations
- Water supply and drought riskImpact: HighLikelihood: Medium
Supply depends on rainfall, reservoirs, groundwater, wholesalers, and legal use restrictions beyond management control.
Exposure - Cybersecurity riskImpact: HighLikelihood: Medium
Utility operations and third-party vendors are exposed to increasingly sophisticated attacks, and insurance may not cover all losses.
Exposure: Operational technology and customer systems
- Seasonality and weather-driven demand riskImpact: MediumLikelihood: Low
Water usage is lower in wet winter months and can fall further in cool or wet summers, reducing cash flow and increasing borrowing needs.
Exposure: Operating cash flow
- Municipal counterparty riskImpact: MediumLikelihood: Low
Some contracts depend on the financial strength and operations of cities and other public entities.
Exposure: Non-regulated contracts and leases
Accounting
Judgemental itemsThe company capitalizes costs as regulatory assets when future recovery is probable and records regulatory liabilities when refunds are expected.
Impact: Affects earnings timing, balance sheet size, and comparability across periods
These mechanisms track differences between billed revenue and authorized revenue, creating significant true-up entries when rates are approved.
Impact: Can materially increase or decrease reported revenue in a given quarter or year
Water usage is lower in winter and higher in summer, which drives uneven quarterly revenue and operating cash flow.
Impact: Reduces quarter-to-quarter comparability
Management noted new tax legislation requires interpretation and may affect tax accounting as guidance evolves.
Impact: Could change effective tax rate and deferred tax balances
Benefit obligations depend on actuarial assumptions and can move with discount rates and healthcare cost trends.
Impact: Affects operating expense and long-term liabilities
Similar listed companies
Publicly listed companies with a comparable business focus.
American Water Works Company, Inc.
AWK · Water Supply
H2O America
HTO · Water Supply
H2O America is a U.S.
American States Water Company
AWR · Water Supply
American States Water Co (AWR) operates regulated water and electric utilities in California and a contracted services business that runs water and wastewater systems on U.S.
Essential Utilities, Inc.
WTRG · Water Supply
Consolidated Water Co. Ltd.
CWCO · Water Supply
Consolidated Water Co.
Middlesex Water Company
MSEX · Water Supply
Middlesex Water Company is a regulated water and wastewater utility founded in 1897 that serves customers primarily in New Jersey and Delaware.
Last updated: 24/09/2026