California American Water asked California regulators to review an updated $825 million estimate for Monterey desalination facilities, outlining a proposal it says could lower customer impacts by $588 million over 40 years.
The utility said it filed an application with the California Public Utilities Commission (CPUC) on Oct. 23. The filing updates the facilities’ construction estimate and proposes a financing framework and rate treatment for the commission to consider. The company attributed the estimate to approval and permitting delays, legal challenges, higher labor and construction-material costs, and engineering, procurement and legal expenses.
California American Water President Sarah Leeper said the company was pursuing “alternative sources of financing to minimize the costs.” The utility said its financing and rate proposals could reduce the project’s impact on customers over its 40-year life. Its announcement did not explain the calculation, identify specific financing instruments or detail how the measures might affect individual bills.
The project is intended to replace water supplies constrained by legal decisions affecting the Carmel River and Seaside Groundwater Basin, according to the CPUC. The commission’s adopted 2050 estimates put annual demand at 13,732 acre-feet and firm supply at 11,204 acre-feet. The California State Lands Commission says the figures leave a projected yearly shortfall of 2,528 acre-feet.
The CPUC says the project’s second construction phase, associated with the desalination plant, began in August 2026. It estimates the full project will be completed by the end of 2028.
Separately, the State Lands Commission’s slant-well lease application awaits future consideration. The commission says conditions on a related coastal permit remain outstanding and that the permit has not been issued. California American Water’s announcement did not give a date for a CPUC decision on its financing and rate proposals.
