California American Water Updates Monterey Costs

California American Water has submitted updated financing, cost and rate-treatment proposals for the Monterey Peninsula Water Supply Project’s desalination facilities to the California Public Utilities Commission. The total construction estimate is now $825 million, following permitting delays, legal challenges and higher labor, material, engineering, procurement and legal costs. The utility estimates its proposed financing and ratemaking measures could reduce customer impacts by $588 million over the project’s 40-year life. The filing supports a desalination project intended to provide a drought-proof supply for the Monterey Peninsula.

Updated Project Financing

California American Water’s application sets out a low-cost financing framework and a proposed approach to rate treatment for the desalination facilities. The company is also seeking discussions with the CPUC and state and local leaders on further potential cost reductions.

Sarah Leeper, President at California American Water, said:

“California American Water remains committed to ensuring the Monterey Peninsula has a reliable water supply into the future, and we are taking steps to pursue alternative sources of financing to minimize the costs and protect affordability for our customers.”

Sarah Leeper, President at California American Water, said:

“To mitigate the impacts of the project costs, our application proposes financing and ratemaking measures estimated to reduce the impact on customers by $588 million over the 40-year life of the project.”

Monterey Supply Needs

The CPUC authorized the desalination project in 2018 as a solution to Monterey’s long-term water supply needs. The commission approved environmental planning documents and verified supply and demand estimates indicating the region faces a water deficit by 2050.

California American Water reports that its work with state regulatory agencies has reduced pumping from the Carmel River by 75 percent to date. The utility said the project would help address the region’s water supply crisis and support the lifting of a State Water Board cease-and-desist order.

Desalination Project Review

The filing gives regulators and stakeholders updated cost data, financing opportunities and ratemaking considerations to assess. California American Water and its coalition of labor, business, community and environmental advocates continue to support desalination as a technical option to diversify Monterey’s water supplies.

Project updates are available at www.watersupplyproject.org.