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California American Water Submits Monterey Desalination Project Financing and Cost Updates to the California Public Utilities Commission

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  • California American Water submitted an updated application to the CPUC on Oct. 23, 2026, detailing revised cost estimates, a low-cost financing framework, & rate treatment proposals for the Monterey Peninsula Water Supply Project's desalination facilities.
  • The project's total construction estimate has risen to $825 million due to delays from lengthy permitting processes, legal challenges, labor escalations, & increased material costs since the 2018 CPUC authorization.
  • Decades of work with state agencies have reduced Carmel River pumping by 75% & aim to lift the State Water Board's cease-and-desist order that has limited regional economic growth.
  • The CPUC previously authorized the desalination project in 2018 as the best solution for Monterey's long-term needs, confirming a projected water deficit by 2050.
  • California American Water proposes financing & ratemaking measures estimated to reduce the financial impact on customers by $588 million over the project's 40-year life.
  • The utility remains committed to diversifying & drought-proofing water supplies through desalination while collaborating with regulators & stakeholders to minimize costs & ensure affordability.