NEW YORK (Associated Press) - Extremely arid conditions in California and the western United States threatens to drain away the supply of public water utilities, an analyst said in a recent industry update.

Brean, Murray, Carret & Co. analyst Michael Gaugler warned Monday that for four California utilities “the promise of plentiful water supplies for 2008 has largely evaporated.”

“While the first two months of the year put California’s rainfall level well above average, the driest March and early April in almost 70 years has turned what was looking like a wet year into a near-drought,” Gaugler said in a note to clients.

Shares of all four _ California Water Service Group, American States Water Co., SJW Corp. and Southwest Water Co. _ fell during trading last week. American States Water fell the most, losing nearly 7 percent of its valuation.

Gaugler said that at the end of March, rain and snow levels in the Sierra mountains had dropped to 10 percent below average.

The note comes less than a week after American Water Works Co.’s initial public offering. That company’s stock may be hampered by its former owner’s large holding, and potentially helped if the results over the next several quarters are “impressive,” Gaugler said.

American Water operates in 32 states, including California.

In early afternoon trading shares of California Water fell 63 cents to $38.20; shares of American States Water slipped 43 cents to $35.82; shares of SJW rose 66 cents to $30.86; shares of Southwest Water lost 7 cents to $11.12; and American Water Works Company were flat at $21