<PAGE>
 
As Filed with the Securities and Exchange Commission on December 20, 1996
                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 --------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                                 --------------

                            SOUTHWEST WATER COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                          95-1840947
(STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

                             --------------------

                      225 NORTH BARRANCA AVENUE, SUITE 200
                       WEST COVINA, CALIFORNIA 91791-1605
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                             --------------------

               STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS OF 
                            SOUTHWEST WATER COMPANY
                            (FULL TITLE OF THE PLAN)

                             --------------------


         PETER J. MOERBEEK                                COPY TO:    
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER          JAMES W. DANIELS, ESQ. 
      SOUTHWEST WATER COMPANY                          LATHAM & WATKINS    
225 NORTH BARRANCA AVENUE, SUITE 200                 650 TOWN CENTER DRIVE, 
 WEST COVINA, CALIFORNIA 91791-1605                      TWENTIETH FLOOR 
           (818) 915-1551                          COSTA MESA, CALIFORNIA 92626 
                                                          (714) 540-1235    
                     
                     
                     
              (NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                             --------------------
<TABLE> 
<CAPTION> 
------------------------------------------------------------------------------------------------------- 
                        CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------- 
                                                     PROPOSED            PROPOSED                             
                                  AMOUNT             MAXIMUM              MAXIMUM           AMOUNT OF   
TITLE OF SECURITIES                TO BE           OFFERING PRICE    AGGREGATE OFFERING    REGISTRATION 
TO BE REGISTERED                 REGISTERED          PER SHARE (1)         PRICE (1)           FEE       
------------------------------------------------------------------------------------------------------- 
<S>                              <C>               <C>                  <C>                  <C>
Common Stock, $.01 par value...    50,000           $13.125                $656,250           $199
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(h).  The Proposed Maximum Offering Price Per Share and
    Amount of Registration Fee are based upon the average of the high and low
    sales price of the Common Stock in the over-the-counter market, as reported
    on the NASDAQ National Market System, on December 18, 1996 (which were
    $13.25 and $13.00, respectively).                
================================================================================
PROPOSED SALE TO TAKE PLACE AS SOON AFTER THE EFFECTIVE DATE OF THE REGISTRATION
    STATEMENT AS OPTIONS GRANTED UNDER THE STOCK OPTION PLAN ARE EXERCISED.

                                 Total Pages 7
                            Exhibit Index on Page 7
<PAGE>
 
                                    PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.   INCORPORATION OF DOCUMENTS BY REFERENCE
          ---------------------------------------

   The following documents filed with the Securities and Exchange Commission
(the "Commission) are incorporated herein by reference:

     (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
   filed by Southwest Water Company (the "Company") with the Commission.

     (b) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
   1996, filed by the Company with the Commission.

     (c) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
   1996, filed by the Company with the Commission.

     (d) Quarterly Report on Form 10-Q for the fiscal quarter ended September
   30, 1996, filed by the Company with the Commission.

     (e) The description of the Common Stock contained in the Company's
   Registration Statement on Form 8-B (File No. 0-8176) filed with the
   Commission on July 7, 1988, including any subsequently filed amendments and
   reports updating such description.

   All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this Registration Statement and prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part of it
from the respective dates of filing such documents.  Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.  Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.

ITEM 4.   DESCRIPTION OF SECURITIES
          -------------------------

          Not applicable.

ITEM 5.   INTERESTS OF NAMED EXPERTS AND COUNSEL
          --------------------------------------

          Not applicable.

ITEM 6.   INDEMNIFICATION OF DIRECTORS AND OFFICERS
          -----------------------------------------

Statutory Provisions

   Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL") enables a corporation in its certificate of incorporation to
eliminate or limit the personal liability of members of its board of directors
to the corporation or its stockholders for monetary damages for violations of a
director's fiduciary duty of care.  Such a provision would have no effect on the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty.  In addition, no such provision may eliminate or limit
the liability of a director for breaching his duty of loyalty, failing to act in
good faith, engaging in intentional misconduct or 

                                       2
<PAGE>
 
knowingly violating a law, paying an unlawful dividend or approving an illegal
stock repurchase, or obtaining an improper personal benefit.

   Section 145 of the DGCL empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is, or was, a director, officer,
employee or agent of the corporation, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.  No
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.  Additionally, a corporation is required to indemnify its
directors and officers against expenses to the extent that such directors or
officers have been successful on the merits or otherwise in any action, suit or
proceeding or in defense of any claim, issue or matter therein.

   Indemnification can be made by the corporation only upon a determination that
indemnification is proper in the circumstances because the party seeking
indemnification has met the applicable standard of conduct as set forth in the
DGCL.  The indemnification provided by the DGCL shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.  A corporation also has the power to purchase and maintain insurance
on behalf of any person, whether or not the corporation would have the power to
indemnify him against such liability.  The indemnification provided by the DGCL
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

The Company's Certificate of Incorporation and Bylaws

   The Company's Certificate of Incorporation limits the directors' liability
for monetary damages to the Company and its stockholders for breaches of
fiduciary duty except under the circumstances outlined in Section 102(b)(7) of
the DGCL as described above under "--Statutory Provisions."

   The Company's Bylaws extend indemnification rights to the fullest extent
authorized by the DGCL to directors and officers involved in any action, suit or
proceeding where the basis of such involvement is such persons' alleged action
in an official capacity or in another capacity while serving  as a director or
officer of the Company.  The Company's Bylaws also permit the Company to
maintain insurance to protect itself and any of its directors, officers,
employees or agents against any expense, liability or loss incurred as a result
of any action, suit or proceeding whether or not the Company would have the
power to indemnify such person under the DGCL.  The Bylaws also authorize the
Company to enter into a contract with any director, officer, employee or agent
of the Company providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in the Bylaws
of the Company.

   Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors or
officers of the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy and therefore unenforceable.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED
          -----------------------------------

          Not applicable.

                                       3
<PAGE>
 
ITEM 8.   EXHIBITS
          --------

          See Index to Exhibits on page 7.

ITEM 9.   UNDERTAKINGS
          ------------

          (a) The undersigned Registrant hereby undertakes:

              (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

                  (i)   to include any prospectus required by Section 10(a)(3)
          of the Securities Act;

                  (ii)  to reflect in the prospectus any facts or events arising
          after the effective date of the Registration Statement (or the most
          recent post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement; and

                  (iii)  to include any material information with respect to the
           plan of distribution not previously disclosed in this Registration
          Statement or any material change to such information in this
          Registration Statement;

          provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
          apply if the information required to be included in a post-effective
          amendment by those paragraphs is contained in periodic reports filed
          by the Registrant pursuant to Section 13 or Section 15(d) of the
          Exchange Act that are incorporated by reference in the Registration
          Statement.

          (2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at termination of the
offering.

     (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.  In the event that a claim for expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

                                       4
<PAGE>
 
                                   SIGNATURES

   Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of West Covina, State of California, on this 19th day of December, 1996.


                              SOUTHWEST WATER COMPANY
                              a Delaware corporation


                              By: /s/ Peter J. Moerbeek
                                  --------------------------
                                  Peter J. Moerbeek
                                  Vice President and Chief Financial Officer

                                       5
<PAGE>
 
                               POWER OF ATTORNEY

      Each person whose signature appears below hereby authorizes and appoints
Peter J. Moerbeek and Anton C. Garnier, or either one of them, as attorneys-in-
fact and agents, each acting alone, with full powers of substitution to sign on
his or her behalf, individually and in the capacities stated below, and to file
any and all amendments, including post-effective amendments, to this
Registration Statement and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact and
agents full power and authority to perform any other act on behalf of the
undersigned required to be done in the premises.

   Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE> 
<CAPTION> 

    SIGNATURE                                          TITLE                                                  DATE       
    ---------                                          -----                                                  ----       
<S>                                       <C>                                                          <C> 
/s/ Anton C. Garnier                       President, Chief Executive Officer                           December 19, 1996 
------------------------------------       and Director (Principal Executive Officer)                                    
Anton C. Garnier                                                                                                         
                                                                                                                         
                                                                                                                         
/s/ Peter J. Moerbeek                      Vice President Finance, Chief Financial Officer and          December 19, 1996 
------------------------------------       Secretary (Principal Financing and Accounting Officer)                        
Peter J. Moerbeek                                                                                                        
                                                                                                                         
                                                                                                                         
/s/ H. Frederick Christie                  Director                                                     December 19, 1996 
------------------------------------
H. Frederick Christie
                       
                                                  
/s/ Michael J. Fasman                      Director                                                     December 19, 1996 
------------------------------------
Michael J. Fasman
                      
                                                  
/s/ Monroe Harris                          Director                                                     December 19, 1996 
------------------------------------
Monroe Harris
                       
                                                  
/s/ Donovan D. Huennekens                  Director                                                     December 19, 1996 
------------------------------------
Donovan D. Huennekens
                       
                                                  
/s/ Richard Kelton                         Director                                                     December 19, 1996 
------------------------------------
Richard Kelton
                       
                                                   
/s/ Richard Newman                         Director                                                     December 19, 1996  
------------------------------------
Richard Newman
</TABLE> 
                       

                                       6
<PAGE>
 
                               INDEX TO EXHIBITS
<TABLE> 
<CAPTION> 

EXHIBIT                                                             PAGE
-------                                                             ---- 
<S>      <C>                                                        <C> 
4.1       The Stock Option Plan for Non-Employee Directors            8

4.2       Form of Nonqualified Stock Option Agreement for 
          Non-Employee Directors                                      17

5.1       Opinion of Latham & Watkins                                 28

23.1      Consent of Latham & Watkins (included in Exhibit 5.1)       __


23.2      Consent of KPMG Peat Marwick LLP                            29


24        Power of Attorney                                           6
</TABLE> 

                                       7
[{"type": "S-8", "sequence": "1", "description": "FORM S-8 / STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS", "secsgml_size_bytes": 21396}]
{"company-data": {"conformed-name": "SOUTHWEST WATER CO", "cik": "0000092472", "assigned-sic": "4941", "irs-number": "951840947", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-18513", "film-number": "96684453"}, "business-address": {"street1": "225 N BARRANCA AVE STE 200", "city": "WEST COVINA", "state": "CA", "zip": "91791-1605", "phone": "8189151551"}, "mail-address": {"street1": "225 N BARRANCA AVENUE", "street2": "SUITE 200", "city": "WEST COVINA", "state": "CA", "zip": "91791-1605"}, "former-company": {"former-conformed-name": "SUBURBAN WATER SYSTEMS", "date-changed": "19751202"}}
As Filed with the Securities and Exchange Commission on December 20, 1996
                                                           Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 --------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

                                 --------------

                            SOUTHWEST WATER COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                          95-1840947
(STATE OR OTHER JURISDICTION OF                           (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

                             --------------------

                      225 NORTH BARRANCA AVENUE, SUITE 200
                       WEST COVINA, CALIFORNIA 91791-1605
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                             --------------------

               STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS OF 
                            SOUTHWEST WATER COMPANY
                            (FULL TITLE OF THE PLAN)

                             --------------------

         PETER J. MOERBEEK                                COPY TO:    
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER          JAMES W. DANIELS, ESQ. 
      SOUTHWEST WATER COMPANY                          LATHAM & WATKINS    
225 NORTH BARRANCA AVENUE, SUITE 200                 650 TOWN CENTER DRIVE, 
 WEST COVINA, CALIFORNIA 91791-1605                      TWENTIETH FLOOR 
           (818) 915-1551                          COSTA MESA, CALIFORNIA 92626 
                                                          (714) 540-1235    
                     
                     
                     
              (NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                             --------------------
------------------------------------------------------------------------------------------------------- 
                        CALCULATION OF REGISTRATION FEE
------------------------------------------------------------------------------------------------------- 
                                                     PROPOSED            PROPOSED                             
                                  AMOUNT             MAXIMUM              MAXIMUM           AMOUNT OF   
TITLE OF SECURITIES                TO BE           OFFERING PRICE    AGGREGATE OFFERING    REGISTRATION 
TO BE REGISTERED                 REGISTERED          PER SHARE (1)         PRICE (1)           FEE       
-------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value...    50,000           $13.125                $656,250           $199
-------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(h).  The Proposed Maximum Offering Price Per Share and
    Amount of Registration Fee are based upon the average of the high and low
    sales price of the Common Stock in the over-the-counter market, as reported
    on the NASDAQ National Market System, on December 18, 1996 (which were
    $13.25 and $13.00, respectively).                
================================================================================
PROPOSED SALE TO TAKE PLACE AS SOON AFTER THE EFFECTIVE DATE OF THE REGISTRATION
    STATEMENT AS OPTIONS GRANTED UNDER THE STOCK OPTION PLAN ARE EXERCISED.

                                 Total Pages 7
                            Exhibit Index on Page 7
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.   INCORPORATION OF DOCUMENTS BY REFERENCE
          ---------------------------------------

   The following documents filed with the Securities and Exchange Commission
(the "Commission) are incorporated herein by reference:

     (a) Annual Report on Form 10-K for the fiscal year ended December 31, 1995,
   filed by Southwest Water Company (the "Company") with the Commission.

     (b) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
   1996, filed by the Company with the Commission.

     (c) Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
   1996, filed by the Company with the Commission.

     (d) Quarterly Report on Form 10-Q for the fiscal quarter ended September
   30, 1996, filed by the Company with the Commission.

     (e) The description of the Common Stock contained in the Company's
   Registration Statement on Form 8-B (File No. 0-8176) filed with the
   Commission on July 7, 1988, including any subsequently filed amendments and
   reports updating such description.

   All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this Registration Statement and prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part of it
from the respective dates of filing such documents.  Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.  Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.

ITEM 4.   DESCRIPTION OF SECURITIES
          -------------------------

          Not applicable.

ITEM 5.   INTERESTS OF NAMED EXPERTS AND COUNSEL
          --------------------------------------

          Not applicable.

ITEM 6.   INDEMNIFICATION OF DIRECTORS AND OFFICERS
          -----------------------------------------

Statutory Provisions

   Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL") enables a corporation in its certificate of incorporation to
eliminate or limit the personal liability of members of its board of directors
to the corporation or its stockholders for monetary damages for violations of a
director's fiduciary duty of care.  Such a provision would have no effect on the
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty.  In addition, no such provision may eliminate or limit
the liability of a director for breaching his duty of loyalty, failing to act in
good faith, engaging in intentional misconduct or 

                                       2
knowingly violating a law, paying an unlawful dividend or approving an illegal
stock repurchase, or obtaining an improper personal benefit.

   Section 145 of the DGCL empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is, or was, a director, officer,
employee or agent of the corporation, against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.  No
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.  Additionally, a corporation is required to indemnify its
directors and officers against expenses to the extent that such directors or
officers have been successful on the merits or otherwise in any action, suit or
proceeding or in defense of any claim, issue or matter therein.

   Indemnification can be made by the corporation only upon a determination that
indemnification is proper in the circumstances because the party seeking
indemnification has met the applicable standard of conduct as set forth in the
DGCL.  The indemnification provided by the DGCL shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.  A corporation also has the power to purchase and maintain insurance
on behalf of any person, whether or not the corporation would have the power to
indemnify him against such liability.  The indemnification provided by the DGCL
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

The Company's Certificate of Incorporation and Bylaws

   The Company's Certificate of Incorporation limits the directors' liability
for monetary damages to the Company and its stockholders for breaches of
fiduciary duty except under the circumstances outlined in Section 102(b)(7) of
the DGCL as described above under "--Statutory Provisions."

   The Company's Bylaws extend indemnification rights to the fullest extent
authorized by the DGCL to directors and officers involved in any action, suit or
proceeding where the basis of such involvement is such persons' alleged action
in an official capacity or in another capacity while serving  as a director or
officer of the Company.  The Company's Bylaws also permit the Company to
maintain insurance to protect itself and any of its directors, officers,
employees or agents against any expense, liability or loss incurred as a result
of any action, suit or proceeding whether or not the Company would have the
power to indemnify such person under the DGCL.  The Bylaws also authorize the
Company to enter into a contract with any director, officer, employee or agent
of the Company providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in the Bylaws
of the Company.

   Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors or
officers of the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy and therefore unenforceable.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED
          -----------------------------------

          Not applicable.

                                       3
ITEM 8.   EXHIBITS
          --------

          See Index to Exhibits on page 7.

ITEM 9.   UNDERTAKINGS
          ------------

          (a) The undersigned Registrant hereby undertakes:

              (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

                  (i)   to include any prospectus required by Section 10(a)(3)
          of the Securities Act;

                  (ii)  to reflect in the prospectus any facts or events arising
          after the effective date of the Registration Statement (or the most
          recent post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement; and

                  (iii)  to include any material information with respect to the
           plan of distribution not previously disclosed in this Registration
          Statement or any material change to such information in this
          Registration Statement;

          provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
          apply if the information required to be included in a post-effective
          amendment by those paragraphs is contained in periodic reports filed
          by the Registrant pursuant to Section 13 or Section 15(d) of the
          Exchange Act that are incorporated by reference in the Registration
          Statement.

          (2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at termination of the
offering.

     (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.  In the event that a claim for expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

                                       4
SIGNATURES

   Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of West Covina, State of California, on this 19th day of December, 1996.

                              SOUTHWEST WATER COMPANY
                              a Delaware corporation

                              By: /s/ Peter J. Moerbeek
                                  --------------------------
                                  Peter J. Moerbeek
                                  Vice President and Chief Financial Officer

                                       5
POWER OF ATTORNEY

      Each person whose signature appears below hereby authorizes and appoints
Peter J. Moerbeek and Anton C. Garnier, or either one of them, as attorneys-in-
fact and agents, each acting alone, with full powers of substitution to sign on
his or her behalf, individually and in the capacities stated below, and to file
any and all amendments, including post-effective amendments, to this
Registration Statement and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact and
agents full power and authority to perform any other act on behalf of the
undersigned required to be done in the premises.

   Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE                                          TITLE                                                  DATE       
    ---------                                          -----                                                  ----
/s/ Anton C. Garnier                       President, Chief Executive Officer                           December 19, 1996 
------------------------------------       and Director (Principal Executive Officer)                                    
Anton C. Garnier                                                                                                         
                                                                                                                         
                                                                                                                         
/s/ Peter J. Moerbeek                      Vice President Finance, Chief Financial Officer and          December 19, 1996 
------------------------------------       Secretary (Principal Financing and Accounting Officer)                        
Peter J. Moerbeek                                                                                                        
                                                                                                                         
                                                                                                                         
/s/ H. Frederick Christie                  Director                                                     December 19, 1996 
------------------------------------
H. Frederick Christie
                       
                                                  
/s/ Michael J. Fasman                      Director                                                     December 19, 1996 
------------------------------------
Michael J. Fasman
                      
                                                  
/s/ Monroe Harris                          Director                                                     December 19, 1996 
------------------------------------
Monroe Harris
                       
                                                  
/s/ Donovan D. Huennekens                  Director                                                     December 19, 1996 
------------------------------------
Donovan D. Huennekens
                       
                                                  
/s/ Richard Kelton                         Director                                                     December 19, 1996 
------------------------------------
Richard Kelton
                       
                                                   
/s/ Richard Newman                         Director                                                     December 19, 1996  
------------------------------------
Richard Newman
6
INDEX TO EXHIBITS
EXHIBIT                                                             PAGE
-------                                                             ----
4.1       The Stock Option Plan for Non-Employee Directors            8

4.2       Form of Nonqualified Stock Option Agreement for 
          Non-Employee Directors                                      17

5.1       Opinion of Latham & Watkins                                 28

23.1      Consent of Latham & Watkins (included in Exhibit 5.1)       __

23.2      Consent of KPMG Peat Marwick LLP                            29

24        Power of Attorney                                           6
7