Exhibit 10.18 Amendment to Business Loan Agreements (a) Bank of America

Exhibit 10.18

Amendment to Business Loan Agreements

(a) Bank of America

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Business
Loan Agreement

This Agreement dated as of May 3, 1999 is among Bank of America National Trust
and Savings Association (the "Bank"), California Water Service Group ("Borrower
1") and CWS Utility Services ("Borrower 2") (Borrower 1 and Borrower 2 are
sometimes referred to collectively as the "Borrowers" and individually as the
"Borrower").

1. LINE OF CREDIT AMOUNT AND TERMS

1.1 Line of Credit Amount.

(a) During the availability period described below, the Bank will provide a
line of credit to the Borrowers. The amount of the line of credit (the
"Commitment") is Twenty Million and 00/1 00 Dollars ($20,000,000.00).

(b) This is a revolving line of credit providing for cash advances and
letters of credit. During the availability period, the Borrowers may
repay principal amounts and reborrow them.

(c) The Borrowers agree not to permit the outstanding principal balance of
advances under the line of credit plus the outstanding amounts of any
letters of credit, including amounts drawn on letters of credit and not
yet reimbursed, to exceed the Commitment.

1.2 Availability Period. The line of credit is available between the date
of this Agreement and April 30, 2001 (the "Expiration Date") unless any
Borrower is in default.

1.3 Interest Rate.

(a) The interest rate is the Bank's Reference Rate minus 0.5 percentage
points.

(b) The Reference Rate is the rate of interest publicly announced from time
to time by the Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans. The Bank may price loans to its customers at,
above, or below the Reference Rate. Any change in the Reference Rate
shall take effect at the opening of business on the day specified in
the public announcement of a change in the Bank's Reference Rate.

1.4 Repayment Terms.

(a) The Borrowers will pay interest on June 1, 1999, and then monthly
thereafter until payment in full of any principal outstanding under
this line of credit.

(b) The Borrowers will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than
the Expiration Date. Any interest period for an optional interest rate
(as described below) shall expire no later than the Expiration Date.

1.5 Optional Interest Rates. Instead of the interest rate based on the Bank's
Reference Rate, the Borrowers may elect the optional interest rates listed below
during interest periods agreed to by the Bank and the Borrowers. The optional
interest rates shall be subject to the terms and conditions described

later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:

(a) Fixed Rates.

(b) the LIBOR Rate plus 1.25 percentage points.

1.6 Letters of Credit.

(a) This line of credit may be used for financing:

(i) standby letters of credit with a maximum maturity of 365 days
but not to extend beyond December 31, 2001. The standby
letters of credit may include a provision providing that the
maturity date will be automatically extended each year for an
additional year unless the Bank gives written notice to the
contrary; provided, however, that each letter of credit must
include a final maturity date which will not be subject to
automatic extension.
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(ii) The amount of letters of credit outstanding at any one time
(including amounts drawn on letters of credit and not yet
reimbursed) may not exceed Ten Million and 00/1 00 Dollars ($1
0,000,000.00).

(b) Each Borrower agrees:

(i) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this
Agreement. The amount will bear interest and be due as described
elsewhere in this Agreement.

(ii) if there is a default under this Agreement, to immediately
prepay and make the Bank whole for any outstanding letters of
credit.

(iii) the issuance of any letter of credit and any amendment to a
letter of credit is subject to the Bank's written approval and
must be in form and content satisfactory to the Bank and in
favor of a beneficiary acceptable to the Bank.

(iv) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.

(v) to pay any issuance and/or other fees that the Bank notifies the
Borrowers will be charged for issuing and processing letters of
credit for the Borrowers.

(vi) to allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other charges.

2. OPTIONAL INTEREST RATES

2.1 Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and on the first
day of each month during the interest period. At the end of any interest period,
the interest rate will revert to the rate based on the Reference Rate, unless
the Borrowers have designated another optional interest rate for the Portion. No
Portion will be converted to a different interest rate during the applicable
interest period. Upon the occurrence of an event of default under this
Agreement, the Bank may terminate the availability of optional interest rates
for interest periods commencing after the default occurs.

2.2 Fixed Rate. The election of Fixed Rates shall be subject to the
following terms and requirements:

(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrowers agree will apply to the Portion during the applicable
interest period.

(b) The interest period during which the Fixed Rate will be in effect will
be one year or less.

(i) for interest periods of 91 days or longer, Five Hundred
Thousand Dollars ($500,000).

(ii) for interest periods of between 30 days and 90 days, One
Million Dollars ($1,000,000).

(iii) for interest periods of between 2 days and 29 days, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than thirty million (30,000,000)
dollar-days.

(iv) for interest periods of 1 day, Fifteen Million Dollars
($15,000,000).

(d) Each prepayment of a Fixed Rate Portion, whether voluntary, by reason
of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee as
described below. A "prepayment" is a payment of an amount on a date
earlier than the scheduled payment date for such amount as required by
this Agreement. The prepayment fee shall be equal to the amount (if
any) by which:

(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds

(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market,
or other appropriate money market selected by the Bank for a
period starting on the date on which it was prepaid and ending
on the last day of the interest period for such Portion (or
the scheduled payment date for the amount prepaid, if
earlier).

2.3 LIBOR Rate. The election of LIBOR Rates shall be subject to the
following terms and requirements:

(a) The interest period during which the LIBOR Rate will be in effect will
be one, two or three weeks, or one, two, three, four, five, six, seven,
eight, nine, ten, eleven, or twelve months. The first day of the
interest period must be a day other than a Saturday or a Sunday on
which the Bank is open for business in California, New York and London
and dealing in offshore dollars (a "LIBOR Banking Day"). The last day
of the interest period and the actual number of days during the
interest period will be determined by the Bank using the practices of
the London inter-bank market.

(b) Each LIBOR Rate Portion will be for an amount not less than the
following:

(i) for interest periods of four months or longer, Five Hundred
Thousand Dollars ($500,000).

(ii) for interest periods of one, two or three months, One Million
Dollars ($1,000,000).

(iii) for interest periods of one, two or three weeks, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than thirty million (30,000,000)
dollar-days.

(c) The "LIBOR Rate" means the interest rate determined by the following
formula, rounded upward to the nearest 1 /1 00 of one percent. (All
amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)

LIBOR Rate = London Inter-Bank Offered Rate
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(1.00 - Reserve Percentage)

Where,

(i) "London Inter-Bank Offered Rate" means the interest rate at
which the Bank's London Branch, London, Great Britain, would
offer U.S. dollar deposits for the applicable interest period
to other major banks in the London inter-bank market at
approximately 1 1:00 a.m. London time two (2) London Banking
Days before the commencement of the interest period. A "London
Banking Day" is a day on which the Bank's London Branch is
open for business and dealing in offshore dollars.

(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D,
rounded upward to the nearest 1 /1 00 of one percent. The
percentage will be expressed as a decimal, and will include,
but not be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.

(d) The Borrowers shall irrevocably request a LIBOR Rate Portion no later
than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made
at least three days before the LIBOR Rate takes effect.

(e) The Borrowers may not elect a LIBOR Rate with respect to any principal
amount which is scheduled to be repaid before the last day of the
applicable interest period.

Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of
acceleration or otherwise, will be accompanied by the amount of accrued interest
on the amount prepaid and a prepayment fee as described below. A "prepayment" is
a payment of an amount on a date earlier than the scheduled payment date for
such amount as required by this Agreement. The prepayment fee shall be equal to
the amount (if any) by which:

(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds

(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other
appropriate money market selected by the Bank, for a period
starting on the date on which it was prepaid and ending on the
last day of the interest period for such Portion (or the
scheduled payment date for the amount prepaid, if earlier).

(g) The Bank will have no obligation to accept an election for a LIBOR Rate
Portion if any of the following described events has occurred and is
continuing:

(i) Dollar deposits in the principal amount, and for periods equal to
the interest period, of a LIBOR Rate Portion are not available in
the London inter-bank market; or

3. EXPENSES

3.1 Expenses. The Borrowers agree to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees and documentation fees.

3.2 Reimbursement Costs.

(a) The Borrowers agree to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable aftorneys'fees, including any allocated costs of the Bank's
in-house counsel.

4. DISBURSEMENTS, PAYMENTS AND COSTS

4.1 Requests for Credit; Equal Access by all Borrowers. Any Borrower (or a
person or persons authorized by any one of the Borrowers), acting alone, can
borrow up to the full amount of credit provided under this Agreement. Each
Borrower will be liable for all extensions of credit made under this Agreement
to any other Borrower. Each request for an extension of credit will be made in
writing in a manner acceptable to the Bank, or by another means acceptable to
the Bank.

4.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrowers will be:

(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;

(b) made for the account of the Bank's branch selected by the Bank from time
to time;

(d) evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrowers to sign one or more promissory notes.

4.3 Telephone and Telefax Authorization.

(a) The Bank may honor telephone or telefax instructions for advances or
repayments given by any one of the individuals authorized to sign loan
agreements on behalf of each Borrower, or any other individual
designated by any one of such authorized signers.

(b) Advances will be deposited in and repayments will be withdrawn from
Borrower l's account number 14878-03863, or such other accounts with the
Bank as designated in writing by the Borrowers.

(c) The Borrowers indemnify and excuse the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in connection
with any act resulting from telephone or telefax instructions the Bank
reasonably believes are made by any individual authorized by the
Borrowers to give such instructions. This indemnity and excuse will
survive this Agreement's termination.

4.4 Direct Debit.

(a) The Borrowers agree that interest and any fees will be deducted
automatically on the due date from Borrower `s account number
14878-03863, or such other of the Borrowers' accounts with the Bank as
designated in writing by the Borrowers.

(b) The Bank will debit the account on the dates the payments become due.
If a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.

(c) The Borrowers will maintain sufficient funds in the account on the
dates the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.

4.5 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. All payments and disbursements which would be due on a
day which is not a banking day will be due on the next banking day. All payments
received on a day which is not a banking day will be applied to the credit on
the next banking day.

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4.6 Taxes. If any payments to the Bank under this Agreement are made from
outside the United States, the Borrowers will not deduct any foreign taxes from
any payments they make to the Bank. If any such taxes are imposed on any
payments made by the Borrowers (including payments under this paragraph), the
Borrowers will pay the taxes and will also pay to the Bank, at the time interest
is paid, any additional amount which the Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such taxes had not been
imposed. The Borrowers will confirm that they have paid the taxes by giving the
Bank official tax receipts (or notarized copies) within 30 days after the due
date.

4.7 Additional Costs. The Borrowers will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:

(a) any reserve or deposit requirements; and

(b) any capital requirements relating to the Bank's assets and commitments
for credit.

4.8 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

4.9 Default Rate. Upon the occurrence and during the continuation of any
default under this Agreement, principal amounts outstanding under this Agreement
will at the option of the Bank bear interest at a rate which is 2 percentage
point(s) higher than the rate of interest otherwise provided under this
Agreement. This will not constitute a waiver of any default.

4.10 Interest Compounding. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at the Bank's Reference Rate minus 0.05
percentage points. This may result in compounding of interest.

5. CONDITIONS

The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrowers under this
Agreement:

5.1 Authorizations. Evidence that the execution, delivery and performance
by each Borrower and each guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.

5.2 Governing Documents. A copy of each Borrower's articles of
incorporation.

5.3 Other Items. Any other items that the Bank reasonably requires.

6. REPRESENTATIONS AND WARRANTIES

When the Borrowers sign this Agreement, and until the Bank is repaid in full,
each Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation:

6.1 Organization of Borrowers. Each Borrower is a corporation duly formed
and existing under the laws of the state where organized.

6.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within each Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.

6.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of each Borrower, enforceable against each Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

6.4 Good Standing. In each state in which each Borrower does business, it
is properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

6.5 No Conflicts. This Agreement does not conflict with any law, agreement,
or obligation by which any Borrower is bound.

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6.6 Financial Information. All financial and other information that has
been or will be supplied to the Bank is:

(a) sufficiently complete to give the Bank accurate knowledge of the
Borrowers' (and any guarantor's) financial condition, including all
material contingent liabilities.

(b) in compliance with all government regulations that apply.

6.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrowers or any one of them which, if lost,
would impair the Borrowers' or any Borrower's financial condition or
ability to repay the loan, except as have been disclosed in writing to
the Bank.

6.8 Permits, Franchises. Each Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.

6.9 Other Obligations. No Borrower is in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

6.10 Income Tax Matters. No Borrower has any knowledge of any pending
assessments or adjustments of its income tax for any year.

6.11 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.

6.12 Location of Borrowers. Each Borrower's place of business (or, if any
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrowers' signature on this Agreement.

6.13 Year 2000 Compliance. Each Borrower has conducted a comprehensive
review and assessment of its systems and equipment applications and made inquiry
of such Borrower's key suppliers, vendors and customers with respect to the
loyear 2000 problem" (that is, the inability of computers, as well as embedded
microchips in non-computing devices, to properly perform date-sensitive
functions with respect to certain dates prior to and after December 31, 1999).
Based on that review and inquiry, none of the Borrowers believes the year 2000
problem, including costs of remediation, will result in a material adverse
change in its business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the credit. Each Borrower has
developed adequate contingency plans to ensure uninterrupted and unimpaired
business operation in the event of a failure of its own or a third party's
systems or equipment due to the year 2000 problem, including those of vendors,
customers, and suppliers, as well as a general failure of or interruption in its
communications and delivery infrastructure.

7. COVENANTS

The Borrowers agree, so long as credit is available under this Agreement and
until the Bank is repaid in full:

7.1 Use of Proceeds. To use the proceeds of the credit only for short term
operating capital, bridge financing for capital expenditures and issuing standby
letters of credit.

7.2 Financial Information. To provide the following financial information
and statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:

(a) Within 90 days of Borrower 1's fiscal year end, Borrower 1's annual
financial statements. These financial statements must be audited (with
an unqualified opinion) by a Certified Public Accountant ("CPA")
acceptable to the Bank. The statements shall be prepared on a
consolidated basis.

(b) Within 60 days of the period's end, Borrower 1's quarterly financial
statements including supplemental schedules. These financial statements
may be Borrower prepared. The statements shall be prepared on a
consolidated and consolidating basis.

(c) Within 90 days of its fiscal year end, copies of Borrower 1's Form 1O-K
Annual Report and Form 8-K Current Report (if applicable).

(d) Within 60 days of the period's end, copies of Borrower 1's Form 10-Q
Quarterly Report and Form 8-K Current Report.

(e) Within 90 days of its fiscal year end, Borrower 2's annual financial
statements. These financial statements may be company prepared.
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(f) Within 60 days of the period's end, Borrower 2's quarterly financial
statements. These financial statements may be company prepared.

(g) By April 30 of each year, Borrower 2's narrative business plan.

(h) Within 90 days of the Borrower's fiscal year end, California Water
Company's annual financial statements. These financial statements must
be audited (with an unqualified opinion) by a Certified Public
Accountant ("CPA") acceptable to the Bank.

(i) Within 60 days of the period's end, California Water Company's
quarterly financial statements. These financial statements may be
Borrower prepared.

7.3 Other Debts. Not to have outstanding or incur any direct or contingent
liabilities (other than those to the Bank), or become liable for the liabilities
of others, without the Bank's written consent, which will not be unreasonably
withheld, This does not prohibit:

(a) Acquiring goods, supplies, or merchandise on normal trade credit.

(b) Endorsing negotiable instruments received in the usual course of
business.

(d) Liabilities in existence on the date of this Agreement disclosed in
writing to the Bank.

(e) First mortgage bonds and/or unsecured senior notes currently
outstanding or subsequently issued.

7.4 Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property any Borrower now or later owns,
except:

(a) Deeds of trust and security agreements in favor of the Bank.

(b) Liens for taxes not yet due.

(d) Liens securing first mortgage bonds currently outstanding or
subsequently issued.

7.5 Out of Debt Period. To repay any advances in full, and not to draw any
additional advances on the Borrowers' revolving line of credit, for a period of
at least 30 consecutive days in each line-year. "Line-year" means the period
between the date of this Agreement and December 31, 1999, and each subsequent
one-year period (if any). For the purposes of this paragraph, "advances" does
not include undrawn amounts of outstanding letters of credit.

7.6 Notices to Bank. To promptly notify the Bank in writing of:

(a) any lawsuit over One Million Dollars ($1,000,000) against any one or
more of the Borrowers (or any guarantor).

(b) any substantial dispute between any Borrower (or any guarantor) and any
government authority.

(d) any material adverse change in any Borrower's (or any guarantor's)
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.

(e) any change in any Borrower's name, legal structure, place of business,
or chief executive office if such Borrower has more than one place of
business.

7.7 Books and Records. To maintain adequate books and records.

7.8 Audits. To allow the Bank and its agents to inspect the Borrowers'
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrowers' properties, books or records are in
the possession of a third party, the Borrowers authorize that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.

7.9 Compliance with Laws. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over each Borrower's business.

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7.10 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises each Borrower now has.

7.11 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep each Borrower's properties in good working condition.

7.12 Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.

7.13 General Business Insurance. To maintain insurance as is usual for the
business the Borrowers are in.

7.14 Additional Negative Covenants. Not to, without the Bank's written
consent, which will not be unreasonably withheld:

(a) engage in any business activities substantially different from the
Borrowers' or any Borrower's present business.

(b) liquidate or dissolve the Borrowers' or any Borrower's business.

(c) enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a
limited liability company where any single transaction exceeds Two
Million Five Hundred Thousand Dollars ($2,500,000).

(d) sell, assign, lease, transfer or otherwise dispose of any assets for
less than fair market value, or enter into any agreement to do so.

(e) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the Borrower's business or the Borrower's assets.

(f) enter into any sale and leaseback agreement covering the Borrowers' or
any Borrower's fixed assets.

(g) acquire or purchase a business or its assets for a consideration,
including assumption of direct or contingent debt, where any single
transaction exceeds Two Million Five Hundred Thousand Dollars
($2,500,000).

(h) with respect to Borrower 1, not to enter into any agreement that would
restrict California Water Service Company's ability to declare and pay
dividends to Borrower 1.

8. DEFAULT

If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrowers in default, stop making any additional credit
available to the Borrowers, and require the Borrowers to repay their entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to any Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.

8.1 Failure to Pay. Any Borrower fails to make a payment under this
Agreement when due.

8.2 False Information. Any Borrower (or any guarantor) has given the Bank
false or misleading information or representations.

8.3 Bankruptcy. Any Borrower (or any guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against any Borrower (or any guarantor)
or any Borrower (or any guarantor) makes a general assignment for the benefit of
creditors.

8.4 Receivers. A receiver or similar official is appointed for any
Borrower's (or any guarantor's) business, or the business is terminated.

8.5 Lawsuits. Any lawsuit or lawsuits are filed against any one or more of
the Borrowers (or any guarantor) in an aggregate amount of One Million Dollars
($1,000,000) or more in excess of any insurance coverage.

8.6 Judgments. Any judgments or arbitration awards are entered against any
one or more of the Borrowers (or any guarantor), or any one or more of the
Borrowers (or any guarantor) enters into any settlement agreements with respect
to any litigation or arbitration, in an aggregate amount of One Million Dollars
($1,000,000) or more in excess of any insurance coverage.

8.7 Government Action. Any government authority takes action that the Bank
believes materially adversely affects any Borrower's (or any guarantor's)
financial condition or ability to repay.
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8.8 Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in any Borrower's (or any guarantor's) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.

8.9 Cross-default. Any default occurs under any agreement in connection
with any credit any Borrower (or any guarantor) or any of the Borrower's related
entities or affiliates has obtained from anyone else or which the Borrower (or
any guarantor) or any of the Borrower's related entities or affiliates has
guaranteed, if the default consists of failing to make a payment when due or
gives the other lender the right to accelerate the obligation.

8.10 Default under Related Documents. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is violated or no longer in effect.

8.11 Other Bank Agreements. Any Borrower (or any guarantor) fails to meet
the conditions of, or fails to perform any obligation under any other agreement
any Borrower (or any guarantor) has with the Bank or any affiliate of the Bank.

8.12 Other Breach Under Agreement. Any Borrower fails to meet the conditions
of, or fails to perform any obligation under, any term of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by any Borrower to comply with any financial covenants set
forth in this Agreement, whether such failure is evidenced by financial
statements delivered to the Bank or is otherwise known to any Borrower or the
Bank.

9. ENFORCING THIS AGREEMENT; MISCELLANEOUS

9.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

9.2 California Law. This Agreement is governed by California law.

9.3 Successors and Assigns. This Agreement is binding on the Borrowers'and
the Bank's successors and assignees. The Borrowers agree that they may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrowers with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrowers.

9.4 Arbitration.

(a) This paragraph concerns the resolution of any controversies or claims
between any one or more of the Borrowers and the Bank, including but
not limited to those that arise from:

(i) This Agreement (including any renewals, extensions or modifications of
this Agreement);

(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;

(iii) Any violation of this Agreement; or

(iv) Any claims for damages resulting from any business conducted between
any one or more of the Borrowers and the Bank, including claims for
injury to persons, property or business interests (torts).

(b) At the request of any Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.

(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.

will have the authority to decide whether any such claim or controversy
is barred by the statute of limitations and, if so, to dismiss the
arbitration on that basis.

(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute. The
decision that results from an arbitration proceeding may be submitted
to any authorized court of law to be confirmed and enforced.

--------------------------------------------------------------------------------
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, both the Borrowers and the Bank
must consent to submission of the claim or controversy to arbitration.
If all parties do not consent to arbitration, the controversy or claim
will be settled as follows:

(i) The Borrowers and the Bank will designate a referee (or a panel of
referees) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored proceedings;

(ii) The designated referee (or the panel of referees) will be appointed by
a court as provided in California Code of Civil Procedure Section 638
and the following related sections;

(iii) The referee (or the presiding referee of the panel) will be an active
attorney or a retired judge; and

(iv) The award that results from the decision of the referee (or the panel)
will be entered as a judgment in the court that appointed the referee,
in accordance with the provisions of California Code of Civil Procedure
Sections 644 and 645.

(h) This provision does not limit the right of the Borrowers or the Bank
to:

(i) exercise self-help remedies such as setoff;

(ii) foreclose against or sell any real or personal property
collateral; or

(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:

(A) an interim remedy; and/or

(B) additional or supplementary remedies.

(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrowers or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the
Bank which is secured by real property located in California at the
time of the proposed submission to arbitration, this right is limited
according to the provision above requiring the consent of both the
Borrowers and the Bank to seek resolution through arbitration.

(o) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.

9.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.

9.6 Administration Costs. The Borrowers shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.

9.7 Attorneys' Fees. The Borrowers shall reimburse the Bank for any
reasonable costs and attorneys'fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of

a lawsuit or arbitration proceeding, the prevailing party is entitled to recover
costs and reasonable attorneys' fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator. In the event
that any case is commenced by or against any of the Borrowers under the
Bankruptcy Code (Title 1 1, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of the Bank's in-house counsel.

9.8 Joint and Several Liability.

(a) Each Borrower agrees that it is jointly and severally liable to the Bank
for the payment of all obligations arising under this Agreement, and
that such liability is independent of the obligations of the other
Borrower(s). The Bank may bring an action against any Borrower, whether
an action is brought against the other Borrower(s).

(b) Each Borrower agrees that any release which may be given by the Bank to
the other Borrower(s) or any guarantor will not release such Borrower
from its obligations under this Agreement.

--------------------------------------------------------------------------------
(c) Each Borrower waives any right to assert against the Bank any defense,
setoff, counterclaim, or claims which such Borrower may have against the
other Borrower(s) or any other party liable to the Bank for the
obligations of the Borrowers under this Agreement.

(d) Each Borrower agrees that it is solely responsible for keeping itself
informed as to the financial condition of the other Borrower(s) and of
all circumstances which bear upon the risk of nonpayment. Each Borrower
waives any right it may have to require the Bank to disclose to such
Borrower any information which the Bank may now or hereafter acquire
concerning the financial condition of the other Borrower(s).

(e) Each Borrower waives all rights to notices of default or nonperformance
by any other Borrower under this Agreement. Each Borrower further waives
all rights to notices of the existence or the creation of new
indebtedness by any other Borrower.

The Borrowers represent and warrant to the Bank that each will derive
benefit, directly and indirectly, from the collective administration and
availability of credit under this Agreement. The Borrowers agree that
the Bank will not be required to inquire as to the disposition by any
Borrower of funds disbursed in accordance with the terms of this
Agreement.

(g) Until all obligations of the Borrowers to the Bank under this Agreement
have been paid in full, each Borrower waives any right of subrogation,
reimbursement, indemnification and contribution (contractual, statutory
or otherwise), including without limitation, any claim or right of
subrogation under the Bankruptcy Code (Title 1 1, United States Code) or
any successor statute, which such Borrower may now or hereafter have
against any other Borrower with respect to the indebtedness incurred
under this Agreement. Each Borrower waives any right to enforce any
remedy which the Bank now has or may hereafter have against any other
Borrower, and waives any benefit of, and any right to participate in,
any security now or hereafter held by the Bank.

9.9 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:

(a) represent the sum of the understandings and agreements between the Bank
and the Borrowers concerning this credit;

(b) replace any prior oral or written agreements between the Bank and the
Borrowers concerning this credit; and

(c) are intended by the Bank and the Borrowers as the final, complete and
exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

9.10 Notices. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and the
Borrowers may specify from time to time in writing.

9.11 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

9.12 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and bythe different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.

9.13 Prior Agreement Superseded. This Agreement supersedes the Business Loan
Agreement entered into as of March 16, 1998 between the Bank and the Borrowers,
and any credit outstanding thereunder shall be deemed to be outstanding under
this Agreement.

--------------------------------------------------------------------------------

This Agreement is executed as of the date stated at the top of the first page.

Bank of America California Water Service Group
National Trust and Savings Association

By: Xxxxxx X. Xxxxxx, Vice President,
By: Xxxxxxx Xxxxxxx, Vice President C.F.O. and Treasurer

Address where notices to the Bank are to be sent: Address for Notices:

San Xxxx Commercial Banking Office #01487 0000 Xxxxx Xxxxx Xxxxxx
1 00 Xxxx Xxxxxx Xxxxx Xxx Xxxx, XX 00000
Xxx Xxxx, XX 00000

CWS Utility Services

By: Xxxxxx X. Xxxxxx, Vice President,
C.F.O. and Treasurer

Address for Notices:

0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000

Bank of America

================================================================================
Business Loan Agreement

This Agreement dated as of May 3, 1999 is between Bank of America National Trust
and Savings Association (the "Bank") and California Water Service Company (the
"Borrower").

1. LINE OF CREDIT AMOUNT AND TERMS

1.1 Line of Credit Amount.

(a) During the availability period described below, the Bank will provide a
line of credit to the Borrower. The amount of the line of credit (the
"Commitment") is Thirty Million and 00/1 00 Dollars ($30,000,000.00).

(b) This is a revolving line of credit providing for cash advances and
letters of credit. During the availability period, the Borrower may
repay principal amounts and reborrow them.

(c) The Borrower agrees not to permit the outstanding principal balance of
advances under the line of credit plus the outstanding amounts of any
letters of credit, including amounts drawn on letters of credit and not
yet reimbursed, to exceed the Commitment.

1.2 Availability Period. The line of credit is available between the date
of this Agreement and April 30, 2001 (the "Expiration Date") unless the Borrower
is in default.

1.3 Interest Rate.

(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Reference Rate minus 0.5
percentage points.

1.4 Repayment Terms.

(a) The Borrower will pay interest on June 1, 1999, and then monthly
thereafter until payment in full of any principal outstanding under
this line of credit.

(b) The Borrower will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than
the Expiration Date. Any interest period for an optional interest rate
(as described below) shall expire no later than the Expiration Date.

1.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrower. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:

(a) Fixed Rates.

(b) the LIBOR Rate plus 1.25 percentage points.

1.6 Letters of Credit.

(a) This line of credit may be used for financing:

(ii) The amount of letters of credit outstanding at any one time
(including amounts drawn on letters of credit and not yet
reimbursed) may not exceed Ten Million and 00/1 00 Dollars ($1
0,000,000.00).

(iii) The following letters of credit are outstanding from the Bank
for the account of the

Borrower:

Letter of Credit Number Amount 124609 $1,785,486.00

As of the date of this Agreement, these letters of credit shall be
deemed to be outstanding under this Agreement, and shall be subject to
all the terms and conditions stated in this Agreement.

(b) The Borrower agrees:

(i) any sum drawn under a letter of credit may, at the option of
the Bank, be added to the principal amount outstanding under
this Agreement. The amount will bear interest and be due as
described elsewhere in this Agreement.

(ii) if there is a default under this Agreement, to immediately
prepay and make the Bank whole for any outstanding letters of
credit.

(iv) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.

(v) to pay any issuance and/or other fees that the Bank notifies
the Borrower will be charged for issuing and processing
letters of credit for the Borrower.

(vi) to allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other charges.

2. OPTIONAL INTEREST RATES

2.1 Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and on the first
day of each month during the interest period. At the end of any interest period,
the interest rate will revert to the rate based on the Reference Rate, unless
the Borrower has designated another optional interest rate for the Portion. No
Portion will be converted to a different interest rate during the applicable
interest period. Upon the occurrence of an event of default under this
Agreement, the Bank may terminate the availability of optional interest rates
for interest periods commencing after the default occurs.

2.2 Fixed Rate. The election of Fixed Rates shall be subject to the
following terms and requirements:

(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrower agree will apply during the applicable interest period.

(b) The interest period during which the Fixed Rate will be in effect will
be one year or less.

(i) for interest periods of 91 days or longer, Five Hundred
Thousand Dollars ($500,000).

(ii) for interest periods of between 30 days and 90 days, One
Million Dollars ($1,000,000).

(iv) for interest periods of 1 day, Fifteen Million Dollars
($15,000,000).

--------------------------------------------------------------------------------
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds

(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market,
or other appropriate money market selected by the Bank for a
period starting on the date on which it was prepaid and ending
on the last day of' the interest period for such Portion (or
the scheduled payment date for the amount prepaid, if
earlier).

2.3 LIBOR Rate. The election of LIBOR Rates shall be subject to the
following terms and requirements:

(b) Each LIBOR Rate Portion will be for an amount not less than the
following:

(i) for interest periods of four months or longer, Five Hundred
Thousand Dollars ($500,000).

(ii) for interest periods of one, two or three months, One Million
Dollars ($1,000,000).

The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one
percent. (All amounts in the calculation will be determined by
the Bank as of the first day of the interest' period.)

LIBOR Rate = London Inter-Bank Offered Rate
------------------------------
(1.00 - Reserve Percentage)

Where,

(i) "London Inter-Bank Offered Rate" means the interest rate at
which the Bank's London Branch, London, Great Britain, would
offer U.S. dollar deposits for the applicable interest period
to other major banks in the London inter-bank market at
approximately 11:00 a.m. London time two (2) London Banking
Days before the commencement of the interest

period. A "London Banking Day" is a day on which the Bank's
London Branch is open for business and dealing in offshore
dollars.

(d) The Borrower shall irrevocably request a LIBOR Rate Portion no later
than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made
at least three days before the LIBOR Rate takes effect.

(e) The Borrower may not elect a LIBOR Rate with respect to any principal
amount which is scheduled to be repaid before the last day of the
applicable interest period.

(i) the additional interest which would have been payable during the
interest period on the amount prepaid had it not been prepaid,
exceeds

(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market, or
other appropriate money market selected by the Bank, for a
period starting on the date on which it was prepaid and ending
on the last day of the interest period for such Portion (or the
scheduled payment date for the amount prepaid, if earlier).

--------------------------------------------------------------------------------
(g) The Bank will have no obligation to accept an election for a LIBOR Rate
Portion if any of the following described events has occurred and is
continuing:

(i) Dollar deposits in the principal amount, and for periods equal
to the interest period, of a LIBOR Rate Portion are not
available in the London inter-bank market; or

(ii) the LIBOR Rate does not accurately reflect the cost of a LIBOR
Rate Portion.

3. EXPENSES

3.1 Expenses. The Borrower agrees to immediately repay the Bank for
expenses that include, but are not limited to, filing, recording and search
fees, appraisal fees, title report fees and documentation fees.

3.2 Reimbursement Costs.

(a) The Borrower agrees to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the Bank's
in-house counsel.

4. DISBURSEMENTS, PAYMENTS AND COSTS

4.1 Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.

4.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:

(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;

(b) made for the account of the Bank's branch selected by the Bank from
time to time;

(d) evidenced by records kept by the Bank. In addition, the Bank may, at
its discretion, require the Borrower to sign one or more promissory
notes.

4.3 Telephone and Telefax Authorization.

(a) The Bank may honor telephone or telefax instructions for advances or
repayments given by any one of the individuals authorized to sign loan
agreements on behalf of the Borrower, or any other individual
designated by any one of such authorized signers.

(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's account number 14872-00230, or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower.

(c) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or telefax
instructions the Bank reasonably believes are made by any individual
authorized by the Borrower to give such instructions. This indemnity
and excuse will survive this Agreement's termination.

4.4 Direct Debit.

(a) The Borrower agrees that interest and any fees will be deducted
automatically on the due date from the Borrower's account number
14872-00230, or such other of the Borrower's accounts with the Bank as
designated in writing by the Borrower.

(b) The Bank will debit the account on the dates the payments become due. If
a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.

(c) The Borrower will maintain sufficient funds in the account on the dates
the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.

--------------------------------------------------------------------------------

4.6 Taxes. If any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any payments
made by the Borrower (including payments under this paragraph), the Borrower
will pay the taxes and will also pay to the Bank, at the time interest is paid,
any additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within 30 days after the due date.

4.7 Additional Costs. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a

class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:

(a) any reserve or deposit requirements; and

(b) any capital requirements relating to the Bank's assets and commitments
for credit.

4.10 Interest Compounding. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at the Bank's Reference Rate minus 0.5
percentage points. This may result in compounding of interest.

5. CONDITIONS

The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement:

5.1 Authorizations. Evidence that the execution, delivery and performance
by the Borrower and each guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.

5.2 Governing Documents. A copy of the Borrower's articles of
incorporation.

5.3 Guaranty. A guaranty signed by California Water Service Group in the
amount of Thirty Million Dollars ($30,000,000).

5.4 Other Items. Any other items that the Bank reasonably requires.

6. REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation:

6.1 Organization of Borrower. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.

6.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.

6.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
--------------------------------------------------------------------------------

6.4 Good Standing. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

6.5 No Conflicts. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.

6.6 Financial Information. All financial and other information that has
been or will be supplied to the Bank is:

(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's (and any guarantor's) financial condition, including all
material contingent liabilities.

(b) in compliance with all government regulations that apply.

6.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.

6.8 Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.

6.9 Other Obligations. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

6.10 Income Tax Matters. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.

6.11 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.

6.12 Location of Borrower. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrower's signature on this Agreement.

6.13 Year 2000 Compliance. The Borrower has conducted a comprehensive review
and assessment of the Borrower's systems and equipment applications and made
inquiry of the Borrower's key suppliers, vendors and customers with respect to
the "year 2000 problem" (that is, the inability of computers, as well as
embedded microchips in non-computing devices, to properly perform date-sensitive
functions with respect to certain dates prior to and after December 31, 1999).
Based on that review and inquiry, the Borrower does not believe the year 2000
problem, including costs of remediation, will result in a material adverse
change in the Borrower's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit. The
Borrower has developed adequate contingency plans to ensure uninterrupted and
unimpaired business operation in the event of a failure of its own or a third
party's systems or equipment due to the year 2000 problem, including those of
vendors, customers, and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure.

7. COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:

7.1 Use of Proceeds. To use the proceeds of the credit only for short term
operating capital, bridge financing for capital expenditures and issuing standby
letters of credit.

(a) Within 90 days of the Borrower's fiscal year end, the Borrower's annual
financial statements. These financial statements must be audited (with
an unqualified opinion) by a Certified Public Accountant ("CPA")
acceptable to the Bank.

(b) Within 60 days of the period's end, the Borrower's quarterly financial
statements. These financial statements may be Borrower prepared.

statements. These financial statements must be audited (with an
unqualified opinion) by a CPA acceptable to the Bank. The statements
shall be prepared on a consolidated basis.

--------------------------------------------------------------------------------
(f) Within 60 days of the period's end, California Water Service Group's
quarterly financial statements including supplemental schedules. These
financial statements may be company prepared. The statements shall be
prepared on a consolidated and consolidating basis.

(e) Within 90 days of its fiscal year end, copies of California Water
Service Group's Form 1 O-K Annual Report and Form 8-K Current Report
(if applicable).

(f) Within 60 days of the period's end, copies of California Water Service
Group's Form 10-Q Quarterly Report and Form 8-K Current Report.

(g) Within 90 days of its fiscal year end, CWS Utility Services' annual
financial statements. These financial statements may be company
prepared.

(h) Within 60 days of the period's end, CWS Utility Services' quarterly
financial statements. These financial statements may be company
prepared.

(i) By April 30 of each year, CWS Utility Services' narrative business
plan.

(a) Acquiring goods, supplies, or merchandise on normal trade credit.

(b) Endorsing negotiable instruments received in the usual course of
business.

(d) Liabilities in existence on the date of this Agreement disclosed in
writing to the Bank.

(e) First mortgage bonds and/or unsecured senior notes currently
outstanding or subsequently issued.

7.4 Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:

(a) Deeds of trust and security agreements in favor of the Bank.

(b) Liens for taxes not yet due. ,

(d) Liens securing first mortgage bonds currently outstanding or
subsequently issued.

7.5 Out of Debt Period. To repay any advances in full, and not to draw any
additional advances on its revolving line of credit, for a period of at least 30
consecutive days in each line-year. "Line-year" means the period between the
date of this Agreement and December 31, 1999, and each subsequent one-year
period (if any). For the purposes of this paragraph, "advances" does not include
undrawn amounts of outstanding letters of credit.

7.6 Notices to Bank. To promptly notify the Bank in writing of:

(a) any lawsuit over One Million Dollars ($1,000,000) against the Borrower
(or any guarantor).

(b) any substantial dispute between the Borrower (or any guarantor) and any
government authority.

(d) any material adverse change in the Borrower's (or any guarantor's)
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.

(e) any change in the Borrower's name, legal structure, place of business,
or chief executive office if the Borrower has more than one place of
business.

7.7 Books and Records. To maintain adequate books and records.

--------------------------------------------------------------------------------
7.8 Audits. To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrowees properties, books or records are in the
possession of a third party, the Borrower authorizes that third party to permit
the Bank or its agents to have access to perform inspections or audits and to
respond to the Bank's requests for information concerning such properties, books
and records.

7.9 Compliance with Laws. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over the Borrower's business.

7.10 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.

7.11 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.

7.12 Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.

7.13 General Business Insurance. To maintain insurance as is usual for the
business it is in.

7.14 Additional Negative Covenants. Not to, without the Bank's written
consent, which will not be unreasonably withheld:

(a) engage in any business activities substantially different from the
Borrower's present business.

(b) liquidate or dissolve the Borrower's business.

(d) sell, assign, lease, transfer or otherwise dispose of any assets for
less than fair market value, or enter into any agreement to do so.

(e) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the Borrower's business or the Borrower's assets.

enter into any sale and leaseback agreement covering any of its fixed
assets.

7.15 Bond Rating. To maintain an investment grade bond rating on its rated
securities as defined by Xxxxx'x Investors Service, Inc. and Standard & Poor's
Rating Group.

8. DEFAULT

If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its

entire debt immediately and without prior notice. If an event of default occurs
under the paragraph entitled "Bankruptcy," below, with respect to the Borrower,
then the entire debt outstanding under this Agreement will automatically be due
immediately.

8.1 Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.

8.2 False Information. The Borrower (or any guarantor) has given the Bank
false or misleading information or representations.

8.3 Bankruptcy. The Borrower (or any guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower (or any guarantor)
or the Borrower (or any guarantor) makes a general assignment for the benefit of
creditors.

8.4 Receivers. A receiver or similar official is appointed for the
Borrower's (or any guarantor's) business, or the business is terminated.

8.5 Lawsuits. Any lawsuit or lawsuits are filed against the Borrower (or
any guarantor) in an aggregate amount of One Million Dollars ($1,000,000) or
more in excess of any insurance coverage.

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8.6 Judgments. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor), or the Borrower (or any guarantor) enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of One Million Dollars ($1,000,000) or more in excess of any
insurance coverage.

8.7 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's)
financial condition or ability to repay.

8.8 Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any guarantor's) business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.

8.9 Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower (or any guarantor) or any of the Borrower's related
entities or affiliates has obtained from anyone else or which the Borrower (or
any guarantor) or any of the Borrower's related entities or affiliates has
guaranteed, if the default consists of failing to make a payment when due or
gives other lender the right to accelerate the obligations.

8.10 Default under Related Documents. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is violated or no longer in effect.

8.11 Other Bank Agreements. The Borrower (or any guarantor) fails to meet
the conditions of, or fails to perform any obligation under any other agreement
the Borrower (or any guarantor) has with the Bank or any affiliate of the Bank.

8.12 Other Breach Under Agreement. The Borrower fails to meet the conditions
of, or fails to perform any obligation under, any term of this Agreement not
specifically referred to in this Article. This includes any failure or
anticipated failure by the Borrower to comply with any financial covenants set
forth in this Agreement, whether such failure is evidenced by financial
statements delivered to the Bank or is otherwise known to the Borrower or the
Bank.

8.13 Guarantor's Covenant. California Water Service Group fails to comply
with the following covenant:

(a) Dividends. Not to enter into any agreement which would restrict the
Borrower's ability to declare and pay dividends to California Water
Service Group, without the Bank's written consent.

9. ENFORCING THIS AGREEMENT; MISCELLANEOUS

9.2 California Law. This Agreement is governed by California law.

9.3 Successors and Assigns. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.

9.4 Arbitration.

(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:

(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);

(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;

(iii) Any violation of this Agreement; or

(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury to
persons, property or business interests (torts).

(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by California
law.

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(c) Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.

(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of
the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether
any such claim or controversy is barred by the statute of limitations
and, if so, to dismiss the arbitration on that basis.

(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve, any such dispute.

The decision that results from an arbitration proceeding may be submitted to any
authorized court of law to be confirmed and enforced.

(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises
from or relates to an obligation to the Bank secured by real property
located in California. In this case, both the Borrower and the Bank
must consent to submission of the claim or controversy to arbitration.
If both parties do not consent to arbitration, the controversy or claim
will be settled as follows:

(i) The Borrower and the Bank will designate a referee (or a panel
of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are
selected in Association-sponsored proceedings;

(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil
]Procedure Section 638 and the following related sections;

(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and

(iv) The award that results from the decision of the referee (or
the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of
California Code of Civil Procedure Sections 644 and 645.

(h) This provision does not limit the right of the Borrower or the Bank to:

(i) exercise self-help remedies such as setoff;

(ii) foreclose against or sell any real or personal property
collateral; or

(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:

(A) an interim remedy; and/or

(B) additional or supplementary remedies.

(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if
the other party contests the lawsuit. However, if the controversy or
claim arises from or relates to an obligation to the Bank which is
secured by real property located in California at the time of the
proposed submission to arbitration, this right is limited according to
the provision above requiring the consent of both the Borrower and the
Bank to seek resolution through arbitration.

(0) If the Bank forecloses against any real property securing this
Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.

9.6 Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.

9.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to
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recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower under the
Bankruptcy Code (Title 1 1, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of the Bank's in-house counsel.

9.8 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:

(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;

(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and

(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

9.9 Notices. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and the
Borrower may specify from time to time in writing.

9.10 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

9.11 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the

different parties on separate counterparts each of which, when so executed,
shall be deemed an original but all such counterparts shall constitute but one
and the same agreement.

9.12 Prior Agreement Superseded. This Agreement supersedes the Business Loan
Agreement entered into as of April 4, 1997, between the Bank and the Borrower,
and any credit outstanding thereunder shall be deemed to be outstanding under
this Agreement.

This Agreement is executed as of the date stated at the top of the first page.

Bank of America
National Trust and Savings Association California Water Service Company
By: Xxxxxxx Xxxxxxx, Vice President By: Xxxxxx X. Xxxxxx,
Vice President, CFO and
Treasurer

Address where notices to the Bank are to be sent: Address for Notices:

San Xxxx Commercial Banking Office #01487
000 Xxxx Xxxxxx Xxxxx X.X. Xxx 0000
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000

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Table of Contents

Exhibit 10.18 Amendment to Business Loan Agreements (a) Bank of America

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