Clinton, Connecticut, March 16, 2007 – Connecticut Water Service, Inc. (NASDAQ GS: CTWS) — New England's largest domestically based, investor owned-water company — reported income from continuing operations of $6.7 million, or $0.81 per diluted common share, for the year ending December 31, 2006. This is a decrease of approximately $458,000, or $0.07 per diluted common share, from 2005, when income from continuing operations totaled $7.1 million, or $0.88 per diluted common share.

     Also in 2006, the Company generated income from discontinued operations of $243,000, or $0.03 per diluted common share. This amount stemmed from the completion of the Company’s contractual obligations to operate the water system of the Town of Barnstable, Massachusetts. The Company had sold this system, previously part of its Barnstable Water subsidiary, to the town in 2005.

     The source of decline in 2006 income from continuing operations was the Water Activities segment of the business. The Company had expected a decline, which was largely related to the underlying need for the rate increase. Over the past decade, the Company had seen the costs of operating its regulated water utility increase steadily, while the rates it charged customers remained the same. The imbalance was exacerbated by comparatively wet and cool weather during the 2006 growing season, which caused water use and therefore water revenues to decline. In July 2006, the Company filed for its first rate increase in 15 years.

     The Company’s President and Chief Executive Officer, Eric W. Thornburg, characterized 2006 as a pivotal year for CTWS. Mr. Thornburg stated, “As early as 2004, the Company began to note in its SEC filings that earnings would start to decline because of increased operating expenses and substantial capital investments that were not reflected in the prevailing water rates. The new rates approved by regulators recognize these costs and investments. The Connecticut Department of Public Utility Control (DPUC) approval of our rate case settlement balances the needs of customers and the Company. We now have new strength as we pursue earnings growth through expansion and investment in the Water Activities segment.”

     The specifics of the rate filing are contained in the Company’s 2006 Form 10-K. In summary, the Company sought a rate increase to recover more than $130 million in capital investments, as well as operating costs that had grown by more than 60 percent. On January 16, 2007, the DPUC issued a final decision approving a negotiated settlement of the Company’s rate application. The decision provided for a two-step phase-in of higher rates over a 15-month period. The first step, which became effective January 1, 2007, will increase annual revenues by about $7.1 million over pre-rate case revenues of $49.1 million. The second step, effective April 1, 2008, will increase annual revenues by approximately $3.8 million. The DPUC’s decision also provided (through a limited “re-opener” proceeding to be held in the first quarter of 2008) for the recovery of costs associated with up to $15.5 million of additional plant investments made in 2007.

     In addition to the Water Activities segment, the Company’s operations include two other segments, Real Estate and Services and Rentals. Both of these segments reported improved income for 2006. Real Estate income grew by a $2.1 million, or $0.26 per basic common share, from 2005. This improvement reflected the sale of land by BARLACO, a wholly owned subsidiary of the Company, to the Town of Barnstable, Massachusetts, for $1.0 million in February 2006. The Company recorded a net gain of $980,000 on the sale. Additionally, the segment benefited from the completion of an IRS examination in 2006 that resulted in no change to the tax liability for the years under examination.

     Income from the Services and Rentals segment grew by $52,000, or $0.01 per basic common share, from 2005. This increase reflected the continued growth in the Linebacker® service line repair program, and the receipt of additional contracts to operate water systems. One such contract was the agreement with the University of Connecticut to operate its water systems at the University’s Storrs Campus.

# # #

News media contact:

Daniel J. Meaney, APR -- Director of Corporate Communications
Connecticut Water Service, Inc.
93 West Main Street, Clinton, CT 06413-1600
(860) 669 8630 Ext. 3016

# # #

Connecticut Water Service, Inc. & Subsidiaries

Consolidated Statements of Income (in thousands except per share data)
	Year Ended December 31,
	2006	2005
Operating Revenues	$46,945	$47,453
Utility Operating Income	$7,525	$10,538
Gain (Loss) on Property Transactions	$2,063	$ (61)
Non-Water Sales Earnings	$515	$463
Income From Continuing Operations	$6,708	$7,166
Discontinued Operations, Net of Tax	$243	$3,158
Net Income Applicable to Common Shareholders	$6,913	$10,286
Basic Earnings Per Average Common Share -          Continuing Operations	$0.81	$0.89
Basic Earnings Per Average Common Share -          Discontinued  Operations	$0.03	$0.38
Basic Total Earnings Per Average Common Share	$0.84	$1.27
Diluted Earnings Per Average Common Share -          Continuing Operation	$0.81	$0.88
Diluted Earnings Per Average Common Share -          Discontinued  Operations	$0.03	$0.38
Diluted Total Earnings Per Average Common Share	$0.84	$1.26
Basic Weighted Average Common Shares Outstanding	8,188	8,094
Diluted Weighted Average Common Shares Outstanding	8,237	8,143
Book Value Per Share	$11.60	$11.52

Connecticut Water Service, Inc. & Subsidiaries

Condensed Consolidated Balance Sheets
(In thousands)	December 31, 2006	December 31, 2005
ASSETS
Net Utility Plant	$263,187	$247,703
Current Assets	14,150	26,146
Other Assets	37,856	32,186
Total Assets	$315,193	$306,035
CAPITALIZATION AND LIABILITIES
Shareholders Equity	$95,938	$94,076
Preferred Stock	772	847
Long-Term Debt	77,347	77,404
Current Liabilities	12,970	13,229
Other Liabilities and Deferred Credits	128,166	120,479
Total Capitalization and Liabilities	$315,193	$306,035

Connecticut Water Service, Inc. is the largest, domestic-based, investor-owned water utility in New England. It provides water to over 83,000 customers or 286,000 people in 41 towns in Connecticut, as well as providing water-related services under contract to municipalities and companies.

This news release may contain certain forward-looking statements regarding the Company’s results of operations and financial position. These forward-looking statements are based on current information and expectations, and are subject to risks and uncertainties, which could cause the Company’s actual results to differ materially from expected results.

The Connecticut Water Company is subject to various federal and state regulatory agencies concerning water quality and environmental standards. Generally, the water industry is materially dependent on the adequacy of approved rates to allow for a fair rate of return on the investment in utility plant. The ability to maintain our operating costs at the lowest possible level while providing good quality water service is beneficial to customers and stockholders. Profitability is also dependent on the timeliness and amount of rate relief and numerous factors over which we have little or no control, such as the quantity of rainfall and temperature, industrial demand, financing costs, energy rates, tax rates, and stock market trends which may affect the return earned on pension assets, and compliance with environmental and water quality regulations. The profitability of our other revenue sources is subject to the amount of land we have available for sale and/or donation, the demand for the land, the continuation of the current state tax benefits relating to the donation of land for open space purposes, regulatory approval of land dispositions, the demand for telecommunications antenna site leases and the successful extensions and expansion of our service contracts. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.