Sometimes the latest news can put an unexpected exclamation point on one of our recent articles. That’s what happened shortly after we published the water utilities-themed issue of Utility Forecaster at the end of March, at which point California’s drought finally reached crisis mode, requiring draconian new measures to curtail water consumption.

To be sure, the investment thesis we put forth in that issue was hardly new. Indeed, we’ve articulated it a number of times in the past: The fact that water utilities provide an absolutely essential service is underscored by the increasing scarcity of the precious resource that they deliver. But California’s mandatory (and unprecedented) water cuts took the scarcity angle of our thesis from the theoretical realm into harsh reality.

To recap, on April 1, California Governor Jerry Brown announced that for the first time in state history, the State Water Resources Control Board would be implementing mandatory water reductions across California, with the goal of reducing overall water usage by 25% within nine months.

According to The Wall Street Journal, a reduction of that magnitude is equivalent to what a city of six million would typically consume in one year.

Though California already had a long-running drought, with a policy of voluntary water cuts in place to address it, the timing of this announcement was driven by the fact that the Sierra Nevada snowpack hit a record low this year. Melted snow from the mountains normally accounts for about one-third of the state’s water supply.

In fact, in the weeks prior to the order being issued, a senior water scientist with NASA garnered numerous headlines with a guest editorial in the Los Angeles Times claiming that satellite data suggest the state has only about a one-year supply left of water stored in its reservoirs.

Apparently, some readers got the impression that the state only has a year left of all sources of water, which isn’t the case. But it’s a dramatic statistic nonetheless.

On the utility front, the governor called on local water agencies to adjust their rate structures in order to implement conservation pricing, including higher rates, surcharges, fees and penalties, to discourage users from wasting water.

The governor’s order has naturally led to some heated politics, as these days no politician or pundit wants to let a good crisis go to waste without using it as an opportunity to pitch their preferred policy objective.

From the left, almond growers got singled out for wastefulness as a proxy for the state’s hard-hit agriculture sector, which is exempt from the order. From the right, there have been questions about the role the 1973 Endangered Species Act has played in reducing the water supply, since large amounts of water have been diverted from farmland to rivers and streams with hopes of protecting fish such as the three-inch delta smelt.

And, of course, there was the inevitable intersection with pop culture, when various Hollywood celebrities recently got called out for the deep green still evident in aerial photos of the extensive landscaping surrounding their mansions.

That’s despite the fact that the cuts were initially focused on heavy users of water for non-essential purposes, such as the suburban compulsion to maintain a lushly verdant lawn or an immaculate golf green.

Last week, the California government finalized is plans for water rationing, with cuts to individual cities and water districts ranging from 8% to 36% below 2013 levels.

Meanwhile, the WSJ recently reported that the drought has started to affect the bonds issued by California’s municipal water utilities, with investors understandably worried that, even with the potential for higher rates, revenue will still decline. California water and sewer bonds fell 0.61% in April, according to Barclays.

Unfortunately, the ability of the state’s water utilities to raise rates via tiered-pricing plans was dealt a setback in late April, when a California appeals court ruled that such a scheme is in violation of state law, unless a utility can show that its rates are based on its actual costs.

So how have the three water utilities in our coverage universe with exposure to California fared since the rationing announcement?

Over the past six weeks, American States Water Co. (NYSE: AWR), whose water utility subsidiary serves about 258,000 customers in California and accounts for about three-quarters of the company’s revenue, is down about 3.9% on a price basis.

The company also has a small subsidiary that distributes electricity to California residents, as well as a contracted services company that works on water and wastewater systems located on military bases throughout the U.S.

First-quarter earnings were up 14% from a year ago, to $0.32 per share, beating analyst estimates by 10.3%, for the third consecutive upside surprise.

During the company’s earnings call, CEO Robert Sprowls said that billed water consumption fell by 13% year over year, due to conservation efforts. However, he noted that changes in consumption don’t have a significant effect on financial results due to the water revenue adjustment mechanism account in place for its service territories.

Full-year 2015 earnings are forecast to rise 2% year over year.

Shares of the $1.4 billion company are up more than 37% over the trailing year, and like many of its fellow water utilities, its stock is still priced at a significant premium relative to its peers in the broader utilities sector.

American States Water currently yields 2.2%.

Despite its name, California Water Service Group (NYSE: CWT) also serves customers in Washington, New Mexico and Hawaii, though the vast majority of its operations are in California. Over the period since the beginning of April, the stock has fallen 3.1%.

Although the first quarter is typically a slow period for the company, it generated strong earnings thanks to a recent rate increase granted by the state regulator. Earnings came in at $0.03 per share in contrast to a loss of $0.11 a year ago.

The latest result was also well ahead of analyst estimate of $0.01 per share, for the fourth consecutive upside surprise.

During the earnings call, CEO Martin Kropelnicki noted that there are a number of mechanisms in place to smooth out financials during this unprecedented period, including a special conservation account, which they’ll be able tap during what promises to be a difficult summer.

And they also intend to lobby the state regulator to recover any additional expenses that aren’t offset by these various mechanisms and special accounts.

Full-year 2015 earnings are forecast to rise 7% year over year.

Shares of the $1.1 billion company are up 15.5% over the trailing year, and the stock currently trades at a valuation that is only slight above the average utility in the broader sector.

California Water currently yields 2.8%.

American Waters Works Co. (NYSE: AWK), which is one of our favorite water utilities, is far larger and much more diversified than the two others. Indeed, it serves about 15 million customers in more than 45 states and parts of Canada.

Its California operations accounted for just 7% of full-year 2014 revenue. As such, the stock is only down about 1.7% over the past six weeks versus a decline of 0.4% for the Dow Jones Utilities Average.

First-quarter earnings rose 10%, to $0.44 per share, beating analyst estimates by 7.8%, for the third consecutive upside surprise. Full-year 2015 earnings are forecast to rise 7% year over year.

Shares of the $9.6 billion company are up 15.7% over the trailing year and trade at a moderate premium to its peers in the broader utility sector. American Waters Works currently yields 2.5%.