CAL-AM WATER RATE HIKE S.S.

MONTEREY PENINSULA WATER RATES COULD SPIKE IN ABOUT A YEAR, BECAUSE THE CALIFORNIA AMERICAN WATER COMPANY HAS ASKED THE PUBLIC UTILITIES COMMISSION FOR PERMISSION TO RAISE WATER CUSTOMER?S RATES NEARLY 33 PERCENT ON THE PENINSULA, AND 108 PERCENT IN FELTON. CAL-AM HAS ALSO ASKED FOR ADDITIONAL INCREASES IN 2007, AND 2008. A CAL AM SPOKESMAN SAID THE PROPOSED ARE NEEDED TO PAY FOR CAPITAL IMPROVEMENTS, AND A REQUIRED INFUSION TO ITS PENSION FUND.

THE PROPOSED INCREASE DOES NOT INCLUDE THE ENTIRE COST OF THE SAN CLEMENTE DAM PROJECT, OR ANY OF THE COSTS OF CAL AM'S PLANNED DESALINATION PLANT.

CAL AM ALSO WANTS TO BRING THE AMBLER PARK, BISHOP, AND PASADERA DISTRICTS UP, TO EQUALIZE COSTS FOR CAL AM RATE PAYERS THROUGHOUT THE REGION.

THE COMPANY HAS APPLIED TO THE P.U.C. TO MERGE THE SANTA CRUZ MOUNTAIN COMMUNITY'S RATE STRUCTURE, WITH THE PENINSULA'S.