For the full year, the company announced earnings of $1.12 per basic common share, an increase of 6% from 2007 earnings of $1.06 per share. Net income grew despite an approximate 8% reduction in billed water consumption per customer. The drop in consumption was due to a third quarter that was the wettest in the company’s service area since 1955. Typically, the third quarter is the period of highest water sales for the company.

The Water Activities segment, the company’s core business segment, reported operating revenues of $61.3 million compared with $59.0 million for 2007, an increase of 4%. The wet weather caused operating revenues to decline by about $1.5 million. However, two factors offset the weather-related decline, the addition of 2,300 new customers through our January 2008 acquisition of Birmingham Utilities’ eastern operations (Birmingham); and the implementation of new water rates for all customers (except those gained from Birmingham) on April 1, 2008. The new rates allow Connecticut Water to begin recovering the costs of infrastructure improvements put into service during 2007 to better serve the company’s customers.

In 2008, the Water Activities segment produced net income of $8.8 million, or $1.05 per basic common share. This compares with net income of $8.0 million, or $0.96 per basic common share, in 2007.

The company also saw net income growth in its Services and Rentals segment in 2008. For the year, net income from the segment totaled $790,000, or $0.09 per basic common share. Net income for 2007 totaled $651,000, or $0.08 per basic common share.

As anticipated, there were no land sales in 2008 and that led to a small decline in net income from the Real Estate Segment. In 2008, the segment produced a loss of $160,000, or $0.02 per share. In 2007, the segment produced net income of $167,000, or $0.02 per share.

Company-wide operation and maintenance expenses grew 7% to $31.9 million from $29.9 million in 2007. More than half of the increase was due to the acquisition of Birmingham. Capital spending for the year totaled $19.9 million compared with $18.7 million for 2007.

Regarding 2009, Eric W. Thornburg, chairman, president and chief executive officer, has reaffirmed the company’s intention to carry out its previously announced capital spending plan for the year. He states, “We are moving forward with our $26.4 million capital spending plan, which represents a $6.5 million, or 33%, increase over our 2008 capital expenditures. About 90% of the increase in capital spending will be for pipeline-replacement and conservation-related projects, which will be eligible for the new Water Infrastructure and Conservation Adjustment, or WICA.”

WICA allows water utilities to use surcharges to recover investments in water main replacement and other conservation-related infrastructure between rate cases. To use WICA, a water utility must have an Infrastructure Assessment Report (IAR) approved by the Connecticut Department of Public Utility Control (DPUC). The approved IAR provides a road map for water main and other conservation-related infrastructure replacement. A decision on Connecticut Water’s IAR by the DPUC is expected soon, and the company anticipates filing for its first WICA surcharge in the second quarter of 2009.

Thornburg notes that WICA benefits customers, the local economy and shareholders: “Investing in pipe replacement improves water quality and reliability of service to customers. Construction dollars flow to local contractors at a time when they need the business and we can get more for our dollar. Shareholders begin earning on their investment sooner. And WICA also helps to save precious water resources by reducing water main breaks.”

Total return to shareholders was 3.7% for 2008. Connecticut Water has paid dividends on its common stock during each quarter since its founding in 1956 without interruption or reduction, and has increased dividend payments for each of the last 39 years. The company’s dividend reinvestment plan and common stock purchase plan (DRIP) is available to registered shareholders.