(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Connecticut Water Service, Inc.

93 West Main Street

Clinton, CT 06413

March 28, 2007

Dear Shareholder:

       You are cordially invited to the Annual Meeting of Shareholders of Connecticut Water Service, Inc., scheduled to be held on Tuesday, May 8, 2007, at the Lewis B. Rome Commons Ballroom, Gilbert Road Extension, on the University of Connecticut Campus, Storrs, Connecticut, beginning at 2:00 PM. If you plan to attend, please call 1-800-428-3985, Extension 3012, and leave your name, address, and telephone number. Directions to the Annual Meeting are printed on the back of the proxy statement. Your Board of Directors and executive officers look forward to personally meeting you.

       At the meeting, you will be asked to elect directors and ratify the appointment of independent auditors for the fiscal year ending December 31, 2007.

       In addition to the specific matters to be voted on, there will be a report on the progress of the Company and an opportunity for you to ask questions of general interest to shareholders. Important information is contained in the accompanying proxy statement which you are urged to carefully read.

       It is important that your shares are represented and voted at the meeting, regardless of the number you own or whether you attend. Accordingly, please vote by mail, telephone, or internet. It is also very helpful to us if you would call and let us know if you plan to attend.

       Your interest and participation in the affairs of the Company are appreciated.

CONNECTICUT WATER SERVICE, INC.

NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS AND PROXY STATEMENT

May 8, 2007

      The Annual Meeting of Shareholders of Connecticut Water Service, Inc. will be held on Tuesday, May 8, 2007, at 2:00 PM, at the Lewis B. Rome Commons Ballroom, Gilbert Road Extension, on the University of Connecticut Campus, Storrs, Connecticut, for the following purposes:

      Only holders of the Company’s Common Stock and its Cumulative Preferred Stock — Series A of record at the close of business on March 1, 2007 are entitled to vote at this meeting.

      Shareholders are cordially invited to attend the meeting.

Shareholders can help avoid the necessity and expense of follow-up letters to ensure that a quorum is present at the Annual Meeting by promptly voting their shares.

YOU CAN VOTE IN ONE OF THREE WAYS:

      Shareholders are invited to visit the Corporate Governance section of our Web site at www.ctwater.com

TABLE OF CONTENTS

CONNECTICUT WATER SERVICE, INC.

PROXY STATEMENT

2007 ANNUAL MEETING OF SHAREHOLDERS

General Information and Voting of Shares

      This Proxy Statement is furnished by and on behalf of the Board of Directors of the Company for use at the Annual Meeting of Shareholders to be held at the Lewis B. Rome Commons Ballroom, Gilbert Road Extension, on the University of Connecticut campus, Storrs, Connecticut, at 2:00 PM, on May 8, 2007. In that regard, this Proxy Statement is being mailed to the shareholders on or about March 26, 2007 concurrently with the mailing of the Company’s 2006 Annual Report. In addition to this solicitation by mail, officers and regular employees of the Company may make solicitations by telephone, mail, or personal interviews, and arrangements may be made with banks, brokerage firms, and others to forward proxy material to their principals. The Company has retained Morrow & Company, Inc. to assist in the solicitation of proxies at an estimated cost of $4,500, plus expenses, which will be paid by the Company.

What is the purpose of the Annual Meeting of Shareholders?

      Shareholders are asked to consider and vote upon:

      In addition, following the meeting, management will report on the performance of the Company and respond to questions from shareholders.

How is a quorum determined for the Annual Meeting?

      The presence in person or by proxy of a majority of all common shares and Cumulative Preferred Stock — Series A shares issued and outstanding and entitled to vote at the Annual Meeting is required for a quorum. All properly submitted proxies and ballots, including abstentions, broker non-votes and withheld votes are counted as present and entitled to vote. However, abstentions, broker non-votes, and votes withheld are not considered votes cast and will not be counted for or against a matter or nominee.

Who is entitled to Vote?

      Holders of the Company’s Common Stock and its Cumulative Preferred Stock — Series A of record at the close of business on March 1, 2007 are entitled to notice of and to vote at the meeting. On March 1, 2007, the Company had outstanding 8,222,705 shares of Common Stock, 15,000 shares of Cumulative Preferred Stock — Series A, $20 par value, and 29,499 shares of $.90 Cumulative Preferred Stock, $16 par value. Each share of Common Stock is entitled to three votes and each share of Cumulative Preferred Stock — Series A is entitled to one vote on all matters coming before the meeting. The holders of shares of $.90 Cumulative Preferred Stock, $16 par value, have no general voting rights.

What is the difference between holding shares as a shareholder of record and in ‘street name’?

      About half of Connecticut Water’s shareholders hold their shares in each form of ownership. Some of the key differences between these forms of ownership are described below.

How do I Vote?

      Shareholders of record and most shareholders holding shares in street name can vote in the following ways:

      If you vote by telephone or the Internet, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned your proxy card. If you vote by telephone or the Internet, you do not need to return your proxy card.

Can I change my vote?

      Yes. You may change your proxy instructions at any time prior to the vote at the Annual Meeting of Shareholders. For shares held directly in your name, you may do this by granting a later-dated proxy, submitting a later vote by telephone or the Internet, or by attending the Annual Meeting of Shareholders and voting in person. Attendance at the meeting will not cause your previously-granted proxy to be revoked, unless you specifically request it. You may change your proxy instructions for shares in street name by submitting new voting instructions to your broker or nominee.

How is my voted counted?

      If you are a registered shareholder and you vote on a nominee or ratification of independent auditors by selecting one of the options available on the proxy card or via Internet and telephone voting methods, the proxy will be voted as you have specified. However, if you do not specify your intentions on a nominee or ratification of out independent auditors then your vote will be counted FOR that nominee or FOR the ratification of independent auditors.

      If your shares are held in street name and you have not directed your broker or nominee to vote your shares as specified by the voting instructions, then the broker or nominee can determine how to vote your shares for the election of directors and the ratification of independent auditors.

      Regardless of how you choose to vote, your interest in the affairs of Connecticut Water Service, Inc. is important and we encourage you to vote promptly.

How many votes are needed to elect Directors?

      Under Connecticut law, the election of directors requires a plurality of the votes cast by the holders of shares present in person or by proxy and voting at the Annual Meeting of Shareholders.

How many votes are needed to ratify PricewaterhouseCoopers LLP as independent auditors for 2007?

      Ratification of the appointment of the Company’s independent auditors requires the affirmative vote of a majority of the shares present in person or by proxy and voting at the Annual Meeting of Shareholders.

Who counts the votes?

      Representatives of our transfer agent, the Registrar and Transfer Company, will tally the votes and certify the results.

When and how will the voting results be published?

      We will publish the voting results at the Annual Meeting of Shareholders; in a press release, and in a Form 10-Q to be filed with the Securities and Exchange Commission on or about May 15, 2007.

PROPOSAL (1) — ELECTION OF DIRECTORS

      The Company’s Amended and Restated Certificate of Incorporation provides for a Board of no less than nine or more than fifteen directors, the exact number of directorships to be determined from time to time by resolution adopted by affirmative vote of a majority of the Board. The Directors are divided into three classes, I, II and III, as nearly equal in number as practicable, with members to hold office until successors are elected and qualified. Each class is to be elected for a three-year term at successive annual meetings.

      During 2006, the Board of Directors consisted of between twelve (12) and thirteen (13) persons. On June 29, 2006, the Board appointed Heather Hunt as a new Director. Until May 8, 2007, the date of the Annual Meeting, the Board of Directors will consist of thirteen (13) persons, including Marshall T. Chiaraluce, Marcia L. Hincks, and Robert F. Neal who are not standing for re-election. According to the Company’s bylaws, no director shall be eligible for re-election as a director of the Company after such directors have attained the age of 70. Directors Hincks and Neal were not renominated in accordance with Company bylaws prohibiting the nomination of directors who are 70 years of age or older. After May 8, 2007, the Board will consist of ten (10) persons.

      The Corporate Governance Committee recommended, and the Board of Directors selected, the three nominees listed below for election; one is a Class I nominee, Mr. Arthur C. Reeds, standing for re-election, one nominee, Ms. Heather Hunt, was appointed as a Director on June 29, 2006, and one nominee, Mr. Eric W. Thornburg, is a Class III Director whose term expires in 2009, but is proposed to be reclassified into Class I to equalize the number of directors in the classes. Of the remaining Directors, the Class II terms of Directors Hanley, Kachur, Lengyel, and Lentini will expire in 2008. The Class III terms of Directors Thibdaue, Wallace, and Wilbur will expire in 2009. The Board of Directors has determined to fix the number of directorships for the ensuing year at ten. Proxies cannot be voted for a greater number of persons than the number of nominees named.

      Unless otherwise directed, it is intended that the enclosed proxy will be voted for the election of Director nominees Hunt, Reeds, and Thornburg. If any nominee is unable or declines to serve, the persons named in the proxy may vote for some other person(s).

Class I — Nominees for Election at this Meeting Whose Terms Expire in 2010 (age in 2007)

Class II — Directors Continuing in Office Whose Terms Expire in 2008 (age in 2007)

Class III — Directors Continuing in Office Whose Terms Expire in 2009 (age in 2007)

CORPORATE GOVERNANCE

      With the exception of Ms. Hunt and Mr. Thornburg, each director listed above has had the same employment for more than the past five years either in the position indicated or in other similar or executive capacities with the same company or a predecessor.

      In 2006, the Company’s Board of Directors met five times and conducted regular executive sessions of the outside directors without management present. In addition, the Company’s Board of Directors maintains a number of committees; their composition and functions in 2006 follows. In 2006, each director attended at least 86% of the aggregate number of meetings of the Board and Committees on which he or she served. All directors, except Mr. Engle who was not standing for renomination, attended the 2006 Annual Meeting of Shareholders. Directors are expected, but not required, to attend the 2007 Annual Meeting of Shareholders.

Board Committees and Responsibilities

      The Board of Directors of Connecticut Water Service, Inc. has standing Audit, Compensation, Corporate Governance, Executive, Pension Trust and Finance, and Strategic Planning Committees. The Audit, Compensation, and Corporate Governance Committees have adopted written charters. Copies of these

charters are available at the Company’s website, under the Corporate Governance section, or by contacting the Company at the address appearing on Page 32.

Board Committee Membership, Attendance and Function

The Audit Committee

      In 2006, the Audit Committee met seven times, including five telephonic meetings. The Audit Committee appoints, compensates, and oversees the work of the independent auditors of the Company and the Connecticut Water Company (CWC), and monitors the Company’s financial reporting process and internal control systems. The Audit Committee Charter is available on our Web site at www.ctwater.com, under the Corporate Governance Section.

The Compensation Committee

      In 2006, the Compensation Committee met two times, including one telephonic meeting. The Compensation Committee determines officer compensation and the promotion and hiring of officers, reviews Company fringe benefit plans other than retirement plans, and administers the Company’s Performance Stock Programs. The Compensation Committee Charter is available on our website at www.ctwater.com, under the Corporate Governance Section.

      The Committee has the authority to retain any legal counsel, compensation consultant or other consultant to be used to assist in the evaluation of director or executive compensation. The committee has engaged a recognized independent compensation consultant every three years to analyze executive compensation competitiveness and provide recommendations regarding the Company’s Total Pay Program, described in the Compensation Discussion and Analysis Section beginning on Page 17.

      In addition, the Committee receives an annual report from the President/ Chief Executive Officer on each individual executive’s historical compensation information; each executive’s performance review; a progress report on the executive’s results in achieving strategic objectives; and general competitive market information pertaining to salary increase budgets and executive compensation.

The Corporate Governance Committee

      In 2006, the Corporate Governance Committee met twice, including one telephonic meeting. The Corporate Governance Committee reviews the qualifications and independence standards of director nominees and makes recommendation to the Board, and reviews the overall effectiveness of the Board. The

Corporate Governance Committee Charter is available on our website at www.ctwater.com, under the Corporate Governance Section.

The Executive Committee

      In 2006, the Executive Committee had one telephonic meeting. The Executive Committee acts on behalf of the Board whenever the Board is not in session and recommends Chief Executive Officer succession.

The Pension Trust and Finance Committee

      In 2006, the Pension Trust and Finance Committee met six times, including two telephonic meetings. The Pension Trust and Finance Committee reviews the Pension Trust Fund of CWC Employee Retirement Fund, the employee Savings Plan (401(k)), the VEBA Trust Fund for retiree medical benefits, and the Supplemental Executive Retirement Program, reviews and determines actuarial policies and investment guidelines, selects the investment managers, and makes recommendations to and advises the Board of Directors on financial policy issues and the issuance of securities.

Strategic Planning Committee

      In 2006, the Strategic Planning Committee met once. The Strategic Planning Committee oversees the preparation and implementation of the Company’s Strategic Plan.

The Board Nomination Process

      The Corporate Governance Committee identifies director nominees based primarily on recommendations from management, Board members, shareholders, and other sources, such as water industry and state industry associations. Heather Hunt, appointed June 29, 2006, was recommended by Marshall T. Chiaraluce, the Company’s Chairman. All candidates submitted by a shareholder or shareholder group are reviewed and considered in the same manner as all other candidates. The Committee recommends to the Board nominees that are independent and possess qualities such as personal and professional integrity, sound business judgment, and utility, financial, or political expertise. The Committee also considers age and diversity (broadly construed to mean a variety of opinions, perspectives, personal, and professional experiences and backgrounds, such as gender, race, and ethnicity differences, as well as other differentiating characteristics) in making its recommendations for nominees to the full Board. In addition, the Committee considers whether potential director nominees live in CWC’s service regions in sufficient numbers to satisfy the representation requirements of Connecticut Statute 16-62a, and also evaluates other factors that it may deem are in the best interests of the Company and its shareholders. The Committee may, under its charter, retain at the Company’s expense one or more search firms to identify potential board candidates. The Committee does not currently employ an executive search firm, or pay a fee to any other third party, to locate qualified candidates for director positions.

The 2006 Nomination Process

      The Corporate Governance Committee met on October 11, 2006 to consider the renomination of Directors Hunt and Reeds whose terms expire at the 2007 Annual Meeting of Shareholders, and Director Thornburg who is being reclassified as a Class I director to equalize the classes. The Committee reviewed the attendance, performance, and independence of these Directors, but determined to withhold the Committee’s recommendation of these Directors as Director nominees to the Board in order to allow interested shareholders to make either (i) recommendations to the Committee for Director nominees to be considered by the Board for inclusion on the Company’s proxy card, or (ii) formal Director nominations, which, pursuant to the Company’s Bylaws procedures (described below) were due by January 11, 2007. The Committee did not receive a formal shareholder self-nomination for director candidate. After consideration of all candidates, the Committee recommended to the Board, and the Board approved, that the number of Board members should be set at 10 and that Ms. Hunt and Messrs. Reeds and Thornburg should be submitted to shareholders as the Company’s director nominees. Directors Hincks and Neal were not renominated in accordance with

Company Bylaws prohibiting the nomination of directors who are 70 years of age or older. In addition, Mr. Chiaraluce, Chairman, in 2006 announced his retirement from the Company and the Board in May 2007 and did not submit his name for consideration.

Shareholder Recommendations

      The Company’s Bylaws allows nomination of directors by any shareholder who is entitled to vote for the election of directors at either the Annual Meeting of Shareholders or a special meeting where directors are to be elected. Shareholder nominations must be received no later than January 18, 2008, which is 120 days prior to the first anniversary date of the prior year’s Annual Meeting of Shareholders or within 10 days of the mailing date of a Notice of Special Meeting, and must include the following:

      The presiding officer at the meeting will determine if a shareholder nomination was made in accordance with the provisions of the Company’s Bylaws. If the officer determines that a nomination was not compliant with the Bylaws, he shall state so at the meetings and the nomination will be disregarded.

Mandatory Retirement

      According to the Company’s Bylaws, no director shall be eligible for re-election as a director of the Company after such directors has attained the age of 70. Accordingly, Ms. Hincks and Mr. Neal were not renominated in accordance with Bylaws.

Minimum Stock Ownership

      Each Board member is required to own at least 200 shares of Connecticut Water Service, Inc. common stock.

Communications with Directors

      Any shareholder wishing to communicate with a director may do so by contacting the Company’s Corporate Secretary, at the address and telephone number listed on Page 32, who will pass to the director a written, e-mail, or phone communication. The Corporate Secretary has been authorized by the Board to screen frivolous or unlawful communications or commercial advertisements.

Certain Relationships and Related Person Transactions

      During 2006, the Company paid $2,446,515 to Northeast Utilities for which Ms. Thibdaue serves as a Vice President, for electric utility services. The Company paid Northeast Utilities prevailing rates for electric utility services. Northeast Utilities made payments of $5,810 to the Company during 2006 for water service.

Practices and Policies for Review and Approval of Related Person Transactions

      The Company recognizes that transactions between the Company and any of its directors or executives can present potential or actual conflicts of interest. Therefore, as a general matter and in accordance with the Company’s Code of Conduct and the Board of Directors’ Code of Ethics, it is the Company’s preference to avoid such transactions.

      In order to screen any potential conflicts of interest, the Board has designated the Corporate Secretary to review the proxy questionnaire and report to the Corporate Governance Committee, Audit Committee, and Board, if there are any such potential conflicts. The Audit Committee reviews any matter related to audit misconduct and the Corporate Governance Committee reviews any matter related to a conflict of interest of current board members or those considered for board membership. Both committees report to the Board on matters that may rise to the level of an actual or potential conflict.

Board Independence

      The Company’s Common Stock is listed on the NASDAQ Global Select Market. NASDAQ listing rules require that a majority of the Company’s directors be “independent directors” as defined by NASDAQ corporate governance standards. Generally, a director does not qualify as an independent director if the director has, or in the past three years has had, certain material relationships or affiliations with the Company, its external or internal auditors, or is an employee of the Company. The Board has determined that Mesdames Hanley, Hincks, Hunt, Thibdaue, and Wallace and Messrs. Kachur, Lengyel, Lentini, Neal, Reeds, and Wilbur are independent directors under NASDAQ listing standards. Mr. Chiaraluce and Mr. Thornburg, employees of the Company, are not considered independent directors. The Board based these determinations primarily on a review of the responses of the directors and executive officers to questions regarding employment and compensation history, affiliations, family and other relationships, together with an examination of those companies with whom the Company transacts business.

Code of Conduct

      Annually, employees are sent the Company’s Code of Conduct. Thereafter, each employee acknowledges their understanding and compliance with the Code, including the establishment of a Company hotline for reporting Code of Conduct violations. To date, the Company hotline has received no reports of conduct violations. In addition to the Code of Conduct, the Board has adopted an additional Code of Conduct as a result of the Sarbanes-Oxley Act of 2002.

      The public can access the Company’s Code of Conduct on the Company’s website (www.ctwater.com) or by contacting the Company at the address appearing on Page 32.

Director Compensation

      Since the Boards of Directors of the Company and CWC are identical, regular meetings of each are generally held on the same day. Following is a table showing the fees paid to Board members in 2006. Every three years, the Corporate Governance Committee conducts a review of the Board’s compensation. That review was last conducted in October 2004. Currently, each Board and committee meeting fee is $700 for regular meetings; $800 for special meetings; whether they participate in person or by phone. There were no special meetings of the Board or any Committee held in 2006. Committee members who participate in scheduled committee telephone conference calls are paid $350 per call. Each Board member is paid an annual retainer of $8,000 in quarterly installments. Each committee chair is paid an additional retainer of $1,500 in quarterly installments. There are currently no equity awards made to the independent members of the Board of Directors.

      The Table below summarizes the compensation paid by us to our directors during the fiscal year ended December 31, 2006.

      Under the Company’s Directors Deferred Compensation Plan, Directors may elect to defer receipt of all or a specified portion of the compensation payable to them for services as directors until after retiring as directors. Any amounts so deferred are credited to accounts maintained for each participating director, and interest at an annual rate of 8.07% is currently credited on a monthly basis to all deferred amounts. Distribution of amounts deferred and accumulated interest may be made, at the election of each participating director, in a lump sum or in annual installments over a period of years specified by the director, such distribution to commence in the year following the year in which the individual ceases to be a director. For 2006, Mr. Lengyel elected to participate in the Plan. In addition, four of the Company’s retired directors are currently receiving payments under the Plan.

Compensation Committee Interlocks and Insider Participation

      None of the members of the Company’s Compensation Committee (Ms. Hincks and Messrs. Lentini, Neal or Wilbur) was an officer or employee of the Company or any of its subsidiaries during 2006. During 2006, no executive officer of the Company served as a director of or as a member of the Compensation Committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served as a director of the Company, or who served on the Board’s Compensation Committee.

      Board Members David A. Lentini and Marshall T. Chiaraluce serve on the Cooper-Atkins Corporation Board of Directors. Company Board Member Carol P. Wallace is Chairman of the Cooper-Atkins Corporation Board of Directors.

Security Ownership of Certain Beneficial Owners and Management

      The following table lists, to the Company’s knowledge, the ownership of the Company’s Common Stock and the nature of such ownership for each director and nominee for director, for each executive officer named in the Summary Compensation Table, for all executive officers and directors of the Company as a group, and for each person who beneficially owns in excess of 5 percent of the outstanding shares of any class of the Company’s voting securities. Unless otherwise noted, each holder has sole voting and dispositive power with respect to the shares listed. All information is given as of March 1, 2007 and assumes that shares which the named person has a contractual right to acquire within 60 days have been acquired and are outstanding.

Security Ownership of Management

      The table below is information regarding the beneficial ownership of Common Stock of the Company held by the Company’s directors, the named executive officers and all directors, nominees for directors as a group as of March 1, 2007.

      The above ownership individually and as a group is less than 5% of the outstanding shares of Connecticut Water Service, Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

      Under Section 16 of the Securities Exchange Act of 1934, directors, officers and certain beneficial owners of the Company’s equity securities are required to file reports of their transactions in the Company’s equity securities with the Securities and Exchange Commission on specified due dates. In 2006, reports of transactions by all directors, officers and such beneficial holders were timely filed. In making this statement, the Company has relied on the written representations of its directors, officers, and five percent shareholders and copies of the reports that they have filed with the Securities and Exchange Commission.

Other Security Holders

      The following table sets forth information as of March 1, 2007 as to all persons or groups known to the Company to be beneficial owners of more than five percent of the outstanding Common Stock or Preferred A Stock of the Company.

AUDIT COMMITTEE REPORT

      The Board has determined that each member of the Audit Committee qualifies as an “independent director” for purposes of NASDAQ listing standards and also has determined that Carol P. Wallace is a “financial expert” as defined under rules of the Securities and Exchange Commission. In connection with the preparation and filing of the Company’s audited financial statements for the fiscal year ended December 31, 2006 (the “audited financial statements”), the Audit Committee performed the following functions:

      Based upon functions performed, the Audit Committee recommended to the Board of Directors, and the Board approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 for filing with the U.S. Securities and Exchange Commission.

AUDIT COMMITTEE

Marcia L. Hincks (Chairman)

Ronald D. Lengyel

Lisa J. Thibdaue

Carol P. Wallace

Arthur C. Reeds

This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such statutes.

PROPOSAL (2) — RATIFICATION OF APPOINTMENT OF AUDITORS

      The Audit Committee has appointed PricewaterhouseCoopers LLP to serve as independent registered public accounting firm to audit our financial statements for the year ending December 31, 2007. Although we are not required to seek shareholder approval of this appointment, it has been our practice to do so. No determination has been made as to what action the Audit Committee and the Board of Directors would take if our shareholders fail to ratify the appointment.

      Even if the appointment is ratified, the Audit Committee retains discretion to appoint a new independent registered public accounting firm at any time if the Audit Committee concludes such a change would be in the best interests of the Company.

      Representatives of PricewaterhouseCoopers LLP will attend the Annual Meeting of Shareholders, will have the opportunity to make a statement, if they desire to do so, and are expected to be available to respond to appropriate questions.

Principal Accountant’s Fees and Services

      During fiscal year 2006, the Company retained its principal auditor, PricewaterhouseCoopers LLP, to provide services in the following categories and amounts.

      The aggregate fees billed by PricewaterhouseCoopers LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements for the fiscal years ended December 31, 2005 and December 31, 2006, and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for those fiscal years were $417,000 (1) and $410,000 (2), respectively.

      PricewaterhouseCoopers LLP performed audit related professional services as follows:

      In addition to the services and fees stated above, PricewaterhouseCoopers LLP billed the Company for the following.

      In accordance with its charter, the Audit Committee pre-approved all audit and non-audit fees for 2005 and 2006 listed above.

      THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL (2).

EXECUTIVE COMPENSATION

Equity Compensation Plan Information

      The following table provides information about the Company’s Common Stock that may be issued upon the exercise of options and awards under all of the Company’s existing equity compensation plans as of December 31, 2006. The table also includes information about the Company’s other equity compensation plans previously adopted without shareholder approval.

COMPENSATION DISCUSSION AND ANALYSIS

      In this section, we will give an overview and analysis of our compensation program and policies, the material compensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Later in this proxy statement, under the heading “Additional Information Regarding Executive Compensation”, you will find a series of tables containing specific information about the compensation earned or paid in 2006 to the following individuals, whom we refer to as our named executive officers:

      The discussion below is intended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.

      The Compensation Committee has established a competitive and cost effective Total Pay Program (the “Program”) to:

      The Program is designed to reward:

      The Company’s Program consists of the following components:

      The Company has chosen its comprehensive Total Pay Program approach whereby the individual elements work together as follows.

      Each year, the Committee determines the maximum incentive award (denominated in dollars) for each participant, which is based on a percentage of the salary range midpoint for the participant. The Committee also establishes corporate and individual performance measures for the Chief Executive Officer (CEO) and the Chairman and other named executive officers based upon strategic priorities for the purpose of determining the percentage of maximum incentive award a participant is entitled to receive. The Committee also determines the relative weights to be given to corporate and individual goals.

      Each named executive officer has a threshold, target, and maximum incentive amount expressed as a percentage of the salary range midpoint. In 2004-2006, these amounts were 15 percent, 30 percent, and 45 percent, respectively, of the salary range midpoint for the Chairman and for the CEO, and 10 percent, 20 percent and 30 percent, respectively, for the other named executive officers. The same percentages are used for determining the long-term Restricted Stock Award amounts. The plan is intended to pay fully competitive annual cash compensation and provide competitive longer-term stock compensation awards when performance against goals matches the target level. There are no awards paid if performance is below threshold in each criteria.

      At the end of each fiscal year, the Committee reviews a management report on results versus goals and meets with the CEO to evaluate the performance of the other named executive officers. The Committee also meets in the absence of the CEO to evaluate his performance. This performance, expressed as a percentage with threshold (80%), expected (100%), and maximum probable (120%), is used in the determination of the annual incentive as well as the long-term Restricted Stock Award amounts. The Committee has the authority to modify the mathematical results of applying the terms of the Program when the Committee, exercising sound business judgment, deems it prudent to do so. Salary merit increases for the CEO and other officers are based upon the competitive merit increase budget and individual performance vs. job accountabilities, support for the Company’s mission and values as well as managerial capabilities.

      No single pay element can achieve all of the goals and objectives of a sound Total Pay Program. The individual pay elements are intended to work together in an integrated Total Pay Program which is competitive and cost effective; attracts and retains executive talent; balances customer, operating and financial objectives; and is directly aligned with performance and increasing total returns to shareholders through stock price appreciation and dividends.

      The Company’s 2006 Strategic Plan consisted of financial indicators which comprised 50% of the award allocation; performance indicators which comprise 25% of award allocation; and Corporate Initiatives which comprised 25% of the award allocation. The Board established an earnings per share target for 2006 between $0.80 and $0.86 per common share which was achieved; thus the named executive officers received 50% of their award allocation based on the Company’s financial results. Performance Indicators, such as customer satisfaction, shareholder return, water quality, system integrity, utility employee productivity, and non-rate revenue, were partially achieved at target levels and added 13% to the award allocation. Corporate initiatives, such as rate filing, rate case communication plan, improved employee relations, updated distribution system mapping, and additional water supply, were achieved at a maximum levels between target and maximum and added 28.3% to the incentive award allocation. The Compensation Committee determined that each of the named executive officers received 90.9% of their original award allocation.

      Based upon recommendations from the CEO, the Compensation Committee approves executive eligibility for participation in the various compensation and special benefits programs, salary grade and range increases and performance goals and weightings as well as award amounts under the 2004 Performance Stock Program. The Committee keeps the full Board informed on key decisions, trends and developments.

      The Committee receives an annual report from the CEO in executive session on each individual executive’s historical compensation information; each executive’s performance reviews; a progress report on the executive’s results in achieving strategic objectives; and general competitive market information pertaining to salary increase budgets and executive compensation. Every three years, the Committee engages a recognized independent compensation consultant to analyze executive compensation competitiveness and reasonableness of the Company’s executive officer pay levels and program. Comparisons have regularly been made to a sample of larger and smaller publicly-traded water company competitors for executive talent, including such companies as American States Water Corporation, Artesian Resources Corporation, Middlesex Water Company, Pennichuck Corporation, and San Jose Water Corporation. The consultant also provides recommendations regarding Total Pay Program strategy, mix and award practices based upon competitive market trends as well as tax and financial efficiencies. Ernst & Young LLP provided an analysis and recommendation to the Committee on July 31, 2002 and Pearl Meyer & Partners provided an analysis and recommendation to the Committee on August 30, 2005. The next analysis will take place in 2008.

      While the 2004 PSP authorizes Stock Options, Restricted Stock, Performance Shares, and Cash Unit awards, no stock options have been granted since 2004. The size of most annual awards is based upon performance vs. goals and objectives as previously indicated. In conjunction with the review and approval of the upcoming year’s financial and strategic plans each fall, the Committee determines the level of potential awards for the upcoming year. The specific targets are established and the corresponding maximum and minimum awards are set. At the conclusion of the year’s performance being measured, the Committee determines what portion of the awards was actually earned, based upon results. The awards are then made to the participants. For the Long-Term Awards, which vest equally over four years, in addition to achievement of specific pre-established goals, the participant must also meet a continued employment term over four years to become fully vested.

COMPENSATION COMMITTEE REPORT

      We have reviewed and discussed the Compensation Discussion and Analysis with management of Connecticut Water Service, Inc. and, based on our review and discussions and such other matters deemed relevant and appropriate by the Committee, we recommend to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

Robert F. Neal (Chairman)

Marcia C. Hincks

David A. Lentini

Donald B. Wilbur

This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such statutes.

ADDITIONAL INFORMATION REGARDING EXECUTIVE COMPENSATION

2006 Summary Compensation Table

Grants of Plan-Based Awards for 2006

      The Committee allocates a Threshold, Target, and Maximum award for each participant annually in December of the year proceeding the measurement period. Specific targets covering a range of shareholder, customer, and employee driven strategic goals are established before the year begins. At the conclusion of the fiscal year, the Committee reviews a management report, comparing the actual performance against the pre-established goals to determine the level of earned award. The award is paid in accordance with the allocation choices made by the participant between Restricted Stock, Performance Shares and Cash Units, prior to the fiscal year being measured.

Outstanding Equity Awards at Fiscal Year-End 2006

The December 29, 2006 closing price of Connecticut Water Service, Inc. common stock was $22.75 per share.

Material Features of Equity-Based Awards

      The Company’s PSP provides for an aggregate of up to 700,000 shares of Common Stock of the Company to be issued as awards of incentive or non-qualified stock options, shares of restricted stock or awards of performance share or performance cash units (each, an “Award”). Options must be issued at an option price no less than the fair market value of the Company’s Common Stock on the date of the grant. Except as otherwise established by the Compensation Committee, options awarded under the PSP will become exercisable with respect to 25% of the shares subject to the option in equal annual installments, beginning on the first anniversary of the date of the grant of the Option and ratably over the following three anniversaries of such date. The Company has not awarded any stock options under the PSP since December 2004.

      Restricted Stock Awards are conditioned upon the attainment of performance goals established by the Compensation Committee for the performance period to which the Award relates and the award recipient’s continued employment with the Company through the end of the performance period. During the performance period, the participant has all of the rights of a shareholder of the Company, including the right to vote and receive dividends. Participants may elect to have these Awards made in the form of Performance Shares.

      The Compensation Committee may also grant Awards of performance share or performance cash units pursuant to the PSP. At the completion of a performance Award period, the Compensation Committee will

determine the Award to be made to each participant by multiplying the number of performance units granted to each participant by a performance factor representing the degree of attainment of the performance goals. Performance share units will be paid in the form of Common Stock upon the participant’s retirement or termination and performance cash units will be paid in cash.

2006 Options Exercises and Stock Vested

CHANGE IN CONTROL AGREEMENTS

      During May 2001, the Company and The Connecticut Water Company CWC entered into Amended and Restated Employment Agreements with Messrs. Chiaraluce, Benoit, and O’Neill and Ms. Westbrook. Mr. Chiaraluce’s agreement was revised on January 2, 2007. In December 2004, the Company and The Connecticut Water Company entered into an employment agreement with Mr. Marston and on March 16, 2006, the Company and CWC entered into an employment agreement with Eric W. Thornburg. The intent of the agreements is to ensure continuity in the management of the Company in the event of a change in control of the Company. The agreements do not become effective until a change in control occurs (the “Effective Date”). A Change in Control is deemed to occur when (i) any person, other than the Company, CWC or any employee benefit plan sponsored by the Company or CWC, becomes the beneficial owner, directly or indirectly, of twenty (20%) percent or more of the common stock of the Company or CWC; (ii) the stockholders of the Company or CWC approve (A) any consolidation or merger of the Company or CWC in which the Company or CWC is not the continuing or surviving corporation (other than a consolidation or merger of the Company or CWC in which holders of the common stock of the Company or The Connecticut Water Company have the same proportionate ownership of common stock of the surviving corporation) or pursuant to which the common stock of the Company or CWC would be converted into cash, securities or other property, or (B) any sale, lease, exchange or other transfer of all or substantially all the assets of the Company or CWC; (iii) there is a change in the majority of the Board of Directors of the Company or CWC during a 24-month period, or (iv) the Board adopts a resolution to the effect that a change in control has occurred.

      As of the Effective Date, CWC agrees to employ the executives for a continuously renewing three-year period commencing on the Effective Date. Compensation under the agreements is paid by CWC and consists of (i) base salary, (ii) annual bonus, (iii) participation in incentive, savings and retirement plans and welfare plans applicable to executive employees, (iv) fringe benefits, (v) an office and support staff, and (vi) if the executive is employed on the date the Board approves a consolidation, merger, transfer of assets or other transaction described in clause (ii) of the definition of Change in Control above, a stay-on bonus equal to the executive’s then-current base salary, plus an amount equal to the target bonus under the “Officers Incentive Program” for the year in which such date occurs, payable in a lump sum, provided the executive is employed on the fifth day following the closing of such transaction. The stay-on bonus is also payable if the executive’s employment is terminated following such approval but prior to the fifth day following the closing of such transaction by the employer for any reason other than for cause, death or attainment of age 65, or if employment is terminated because of the executive’s disability or if the executive voluntarily terminates employment prior to such date for good reason.

      If the executive’s employment is terminated for cause or by reason of the executive’s death or attainment of age 65 or voluntarily by the executive other than for good reason, the obligations of CWC under the agreements cease and the executive forfeits all rights to receive any compensation or other benefits under the agreement except compensation or benefits accrued or earned and vested by the executive as of the date of termination, including base salary through the date of termination and benefits payable under the terms of any qualified or nonqualified retirement or deferred compensation plans maintained by CWC; provided, that if the executive’s employment is terminated by reason of the executive’s death, in addition to the preceding and any other death benefits which may become payable, base salary continues to be paid at the then current rate for a period of six months to the executive’s beneficiary or estate.

      If the executive’s employment is terminated for any reason other than cause, death or attainment of age 65, or if the executive’s employment is terminated by reason of the executive’s disability, or if the executive voluntarily terminates employment for good reason, the obligations of CWC are, in addition to the stay-on bonus described above, payment or provision of: (i) a lump-sum payment in consideration of the executive’s covenants regarding confidential information and non-competition (the “Covenants”), in an amount determined by an independent expert to be the reasonable value of such Covenants as the termination date (the “Covenant Value”), but in no event greater than the aggregate value of the benefits provided in subparagraphs (ii) — (ix) below (the “Termination Benefits”); such Termination Benefits are to be offset by the Covenant Value, provided, however, that the executive may elect to receive any Termination Benefit that would be so offset, but in such event the Covenant Value will be reduced by the value of such Termination Benefit; (ii) an amount equal to three times the base salary of the executive plus three times the target bonus for the executive under the Officers Incentive Program for the year in which termination occurs, reduced by any amount payable under any applicable severance plan, payable over the three years following termination; (iii) the value of the aggregate amounts that would have been contributed on behalf of the executive under any qualified defined contribution retirement plan(s) then in effect, plus estimated earnings thereon had the executive continued to participate in such plan(s) for an additional three years; (iv) an amount equal to the difference between benefits which would have been payable to the executive under any deferred compensation agreement had the executive continued in the employ of CWC for an additional three years and the benefits actually payable; (v) additional retirement benefits equal to the present value of the difference between the annual pension benefits that would have been payable to the executive under CWC’s qualified defined benefit retirement plan and under any nonqualified supplemental executive retirement plan covering the executive had the executive continued to participate in such plan(s) for an additional three years and the benefits actually payable; (vi) if the executive’s employment is terminated by reason of disability, disability benefits at least equal to the most favorable of those provided by CWC or the Company; (vii) all life, health, disability and similar welfare benefit plans and programs of CWC for a period of three years, plus three additional years of credit for purposes of determining eligibility to participate in any such plan for retirees; (viii) three additional years of all other perquisites as the executive was receiving at the date of termination; and (ix) outplacement services for one year.

      The Company estimates of the payments to each of the named executive officers that would be made under various triggering events are described in the tables below.

Marshall T. Chiaraluce

Eric W. Thornburg

David C. Benoit