SAN DIEGO, Calif. (June 8, 1998) - Western Water Company (NASDAQ: WWTR) announced today improved performance for the fiscal year ended March 31, 1998, as the Company increased revenues and reduced loss compared to the previous fiscal year.

The Company reported a net loss applicable to common stockholders for the year ended March 31, 1998 of $2,458,000, or $0.30 per share, compared to a net loss applicable to common stockholders of $5,392,000, or $.67 per share, for the year ended March 31, 1997. Revenues for the recent fiscal year were $3,922,000, compared to $1,771,000 for the preceding year.

"Our efforts to strategically market our water assets and expand our customer base have improved the prospects for our growth in the coming years," said Michael Patrick George, president and chief executive officer of Western Water.

"During the last fiscal year, we faced a number of challenges in completing transactions with municipal customers, but we are committed to aggressively seeing these projects through, as well as pursuing others in development. We are hopeful that, in the coming year, some of these problems will be resolved so that projects can move forward. In the meantime, we will continue to purchase water rights in Southern California and work with various municipalities and public agencies to facilitate water market transactions. Our strong financial position will be advantageous to us as we strive toward developing a larger market for water resources in the Western United States," said Mr. George.

The net loss applicable to common stockholders for the year ended March 31, 1998 includes $526,000 of preferred dividends, while the net loss applicable to common stockholders for the year ended March 31, 1997 included a loss on discontinued operations of $257,000. A major factor in the lower loss for the year ended March 31, 1998, compared to the preceding year, was a gain of $2,456,000 recognized on the sale of the Company's interest in Nevada Land & Resource Company ("NLRC"), which took place in April 1997.

The increase in revenues in the year was the result of higher sales of both real estate and water. Real estate sales increased to $2,990,000, compared to $1,510,000 in the preceding year, due to the sale of several parcels of land from the Company's holdings in Colorado. Water sales increased to $932,000, compared to $261,000 in the preceding year, due to increased sales in Southern California and Colorado. The higher gross margin from the combination of property and water sales was offset by higher general and administrative costs which were primarily the result of personnel costs and advisory fees, including $1,248,000 of such one-time charges, incurred in connection with the Company's expanded efforts to develop new water transfer programs and to acquire additional water rights.

During the fiscal year ended March 31, 1998, the Company received $4.7 million in cash from the issuance of preferred stock. These net proceeds, combined with those received from the NLRC sale resulted in a $16.8 million balance in cash and short term investments on March 31,1998, an increase of $12.7 million since March 31, 1997.

Western Water is engaged in the development, packaging and sale of water rights and water to municipalities and other end users in the Western United States and owns water rights, real estate and farming operations in California and Colorado.

Statements contained in this release which are not historical facts are forward looking statements that involve risks and uncertainties that could cause actual results or future events to differ from those contained herein. Factors that could cause actual results or events to differ include the company's ability to purchase water rights and obtain financing and other factors and considerations detailed in the Company's Securities and Exchange Commission filings.