New York, November 19, 2002 -- Moody's downgraded the senior secured debt rating of California Water Service Company to A1 from Aa3.
The rating action reflects weakened debt protection measurements due to delayed rate relief from the California Public Utilities Commission and ongoing capital expenditures to maintain water infrastructure and meet environmental compliance requirements. The rating outlook for California Water Service is stable.
Rating downgrade includes California Water Service Company's first mortgage bonds to A1 from Aa3.
In the fourth quarter of 2002, California Water Service expects to receive a rate decision from the California regulators. On a positive note, the California governor signed AB2838 into law on September 30th, permitting interim water relief for the state's water utilities to go into effect after the end of a filed test year period.
The interim rate increase is subject to adjustments upon receiving final California Public Utilities Commission ruling. With the passage of AB2838, we expect that the state's water utilities will receive more timely rate relief to recover capital expenditures and higher operating costs for maintaining sound water utility systems and complying with environmental water standards at both the state and federal levels.
The stable outlook reflects California Water Service Group's, the parent company, financing plans to issue common equity during 2003 and 2004 to reduce debt to total capitalization.
California Water Service Company, a regulated water utility, is headquartered in San Jose, California.
