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California American Water Moves Forward with Monterey Desalination Project

On October 23, 2026, California American Water took a significant step in addressing the ongoing water supply crisis in the Monterey Peninsula by submitting a detailed application to the California Public Utilities Commission (CPUC). This application highlights updates regarding project costs, a low-cost financing approach, and proposed rate treatments associated with the Monterey Peninsula Water Supply Project’s desalination facilities.

For years, California American Water has collaborated with state regulatory bodies to tackle the Peninsula’s critical need for drought-resistant water supplies. The endeavor to lift the State Water Board's existing cease-and-desist order has limited the region's economic expansion and hindered sustainable housing development. Notably, these efforts have led to a substantial 75% reduction in water pumping from the Carmel River to protect the local ecosystem.

In 2018, the CPUC recognized the desalination project as the optimal solution for Monterey's long-term water requirements, acknowledging it aligns with California’s comprehensive Water Resiliency Portfolio that emphasizes the implementation of desalination technology. Following this designation, the CPUC approved the necessary environmental documentation and validated supply and demand assessments, revealing a looming water deficit in the region anticipated by 2050.

Despite the 2018 approval, unforeseen delays connected to extensive approval processes, ongoing legal challenges, and rising costs associated with labor and materials have prolonged the project’s timeline. Consequently, these factors have inflated the total construction estimate to a staggering $825 million.

California American Water President Sarah Leeper reaffirmed the company’s commitment to ensuring a steady water supply for the Monterey Peninsula. She explained that the company is exploring various alternative financing sources to alleviate the financial burden on customers. Their latest application outlines innovative financing and ratemaking strategies aimed at reducing customer impacts by an estimated $588 million over the lifespan of the project, which spans four decades.

The California American Water team, along with its partnerships involving labor, business, community, and environmental advocates, continues to champion desalination as the most effective technical solution to diversify and secure Monterey’s water supplies against drought. The application presented to the CPUC encompasses new cost insights, financing possibilities, and rate structure considerations for regulatory bodies and stakeholders to analyze. It underscores the necessity for the project to progress based on data-driven insights, sustainable funding, and transparent measures aimed at maintaining affordability while mitigating rate increases.

For continued updates on California American Water's initiatives in Monterey, stakeholders and community members can visit the project’s dedicated website at www.watersupplyproject.org. This resource provides the latest information and developments regarding the desalination project and its implications for the local community.

About American Water

American Water, traded under the ticker NYSE AWK, stands as the largest regulated water and wastewater utility entity in the United States. Established in 1886, the company has maintained a rich history and, having celebrated 140 years in 2026, continues its mission under the ethos “We Keep Life Flowing®.” It supplies safe, clean, and dependable drinking water and wastewater services to approximately 14 million customers across 14 states and 19 military installations. Approximately 7,000 skilled professionals work within American Water’s framework to deliver exceptional outcomes that benefit a diverse range of stakeholders, including customers, employees, and investors.

About California American Water

As a subsidiary of American Water, California American Water is staffed by about 300 dedicated employees who provide reliable and affordable water and wastewater services to approximately 720,000 customers in California. Their commitment to upholding high service standards and addressing regional water challenges is paramount to both their operational success and community wellbeing.