SAN DIEGO, Calif. (February 1, 1999) – Western Water Company (NASDAQ:WWTR) announced today a Net Loss Applicable to Common Stockholders for the third quarter ended December 31, 1998 of $1,551,000 or $0.19 per share, compared to Net Income Applicable to Common Stockholders of $19,000 or $0.00 per share for the quarter ended December 31, 1997. Revenues for the quarter were $759,000, compared to $2,696,000 for the quarter ended December 31, 1997.

Revenue from water sales for the quarter ended December 31, 1998 was $759,000, compared to $196,000 for the quarter ended December 31, 1997. The increased was primarily due to $691,000 of water sales to the City of Inglewood and the Santa Margarita Water District. Revenue for the quarter ended December 31, 1997 included $2,500,000 from the sale of real estate; there was no real estate revenue for the quarter ended December 31, 1998.

Net Loss Applicable to Common Stockholders for the nine months ended December 31, 1998 was $3,873,000 or $0.47 per share, compared to Net Loss Applicable to Common Stockholders of $296,000 or $0.04 per share for the nine months ended December 31, 1997. Revenues for the nine months ended December 31, 1998 were $1,250,000, compared to $3,882,000 for the nine months ended December 31, 1997. Net Loss Applicable to Common Stockholders for the nine months ended December 31, 1997 included a gain of $2,436,000 from the sale of the Company’s interest in the Nevada Land and Resources Company.

During the quarter ended December 31, 1998 the Company received $10 million in cash from the issuance of Series D Convertible Redeemable Preferred Stock under a Strategic Relationship Agreement with an affiliate of Sociedad General de Aguas de Barcelona, S. A., one of the world’s leading water distribution companies. These proceeds increased the Company’s cash and short-term investment balance to $17 million as of December 31, 1998.

Michael Patrick George, President and Chief Executive Officer, commenting on the water sale to the Santa Margarita Water District stated that “The Company is elated to have completed the landmark water sale in cooperation with the Metropolitan Water District of Southern California this past quarter.” For the first time in its 70-year history, MWD exchanged water with a private company for delivery within MWD’s service territory. Mr. George added, “Working with MWD underscores our shared commitment to bring more water to Southern California at the lowest cost while protecting the environment. We are proud of our role in this significant pilot project and anticipate cooperation between MWD and private water resource providers on future water transactions.”

Western Water Company is a leading water resource company in the wholesale, non-regulated water market in the Western United States. Its principal activities include the acquisition, development and marketing of water supplies in key market areas throughout the semi-arid southwestern part of the United States.

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.