The California Public Utilities Commission approved California Water Service Group’s subsidiary Cal Water’s acquisition of Palm Mutual Water Company on December 11, 2025, clearing a key regulatory hurdle for the deal that will bring 63 residential customers into Cal Water’s Bakersfield District.
Palm Mutual’s customers are located just two miles from Cal Water’s Northeast Bakersfield Treatment Plant. Cal Water plans to upgrade the system’s infrastructure, replacing aging pipes and installing modern metering to deliver consistent, high‑quality water service to the 63 households and to integrate the network into its existing operations.
The acquisition is part of Cal Water’s broader strategy to consolidate smaller water systems in the Bakersfield area. Combined with a pending purchase of Casa Loma Water Company, the company expects to add roughly 1,000 new customers, expanding its service footprint and improving operational efficiency in a region where water utilities are increasingly merging to achieve scale.
Cal Water’s Q3 2025 earnings report showed a miss, with earnings per share of $1.03 versus analyst expectations of $1.17 and revenue of $311.2 million versus the anticipated $321.35 million. Management attributed the shortfall to higher-than‑expected infrastructure costs and a slower‑than‑anticipated ramp‑up of new service connections. CEO Martin A. Kropelnicki said the company remains confident that the acquisition will be accretive over time and that the investment in infrastructure will support long‑term growth.
The CPUC approval removes a regulatory barrier that had delayed the transaction. Cal Water will file a Tier 2 Advice Letter to adopt its existing rate structure for the new customers, and the deal is expected to close in the first quarter of 2026. The approval also positions the company to leverage its planned $1.6 billion investment in water system upgrades from 2025 to 2027, reinforcing its commitment to service reliability and sustainability.
With the approval in place, Cal Water is poised to integrate Palm Mutual’s operations, expand its customer base, and strengthen its competitive position in California’s water utility market. The acquisition is expected to enhance service quality for the new customers while supporting the company’s long‑term financial and operational objectives.
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