California Water Service Group Annual Report 2005

	Pension Benefits		Other Benefits
Weighted average assumptions as of December 31:	2005	2004	2005	2004
Discount rate	5.60%	6.00%	5.60%	6.00%
Long-term rate of return on plan assets	8.00%	8.00%	8.00%	8.00%
Rate of compensation increase	3.75%	3.00%	--	--

The long-term rate of return assumption is the expected rate of return on a balanced portfolio invested roughly 60% in equities and 40% in fixed income securities. The average return for the plan for the last five and 10 years was 7% and 8.7%, respectively.

Net periodic benefit costs for the pension and other postretirement plans for the years ending December 31, 2005, 2004, and 2003 included the following components:

	Pension Benefits			Other Benefits
	2005	2004	2003	2005	2004	2003
Service Cost	$4,335	$4,608	$3,879	$1,019	$1,461	$1,033
Interest Cost	5,511	5,613	5,374	1,088	1,560	1,224
Expected return on plan assets	(5,285)	(4,861)	(4,757)	(419)	(340)	(233)
Net amortization and deferral	2,191	2,014	1,861	355	894	637
Net periodic benefit cost	$6,762	$7,374	$6,357	$2,043	$3,575	$2,661

Below are the actuarial assumptions used in determining the net periodic benefit costs for the benefit plans:

	Pension Benefits		Other Benefits
Weighted average assumptions as of December 31:	2005	2004	2005	2004
Discount rate	6.00%	6.00%	6.00%	6.00%
Long-term rate of return on plan assets	8.00%	8.00%	8.00%	8.00%
Rate of compensation increase	3.00%	3.00%	--	--

Postretirement benefit expense recorded in 2005, 2004, and 2003, was $1,572, $1,420, and $1,160, respectively. The remaining net periodic benefit cost as of December 31, 2005, of $9,791 is expected to be recovered through future customer rates and is recorded as a regulatory asset. The Company intends to make annual contributions to the plan up to the amount deductible for tax purposes.

For 2005 measurement purposes, the Company assumed an 8.5% annual rate of increase in the per capita cost of covered benefits, with the rate decreasing 1% per year for the next four years to a long-term annual rate of 4.5% per year after four years. The health care cost trend rate assumption has a significant effect on the amounts reported. A one-percentage point change in assumed health care cost trends is estimated to have the following effect:

	1 -Percentage Point Increase	1 -Percentage Point Decrease
Effect on total service and interest costs	$422	$(331)
Effect on accumulated postretirement benefit obligation	$3,693	$(2,949)

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