- California American Water submitted its updated estimate on October 23.
- Monterey County Now reports the estimate is about 3.5 times the 2018 figure.
- The first phase would produce less water than originally proposed.
- The company proposes financing measures to reduce costs passed to customers.
- State regulators will review the proposal and its effects on bills.
Friday, October 30, 2026 — California American Water has put a new price on its planned Monterey Peninsula desalination facilities: $825 million.
The company’s October 23, 2026, application asks the California Public Utilities Commission to consider updated construction costs, financing arrangements and rules for recovering project expenses from customers.
According to Monterey County Now
, the estimate has risen from $239 million in 2018 to about 3.5 times that amount. The newspaper also reports that the new estimate covers a smaller initial project.
A higher price for a smaller first phase.
Monterey County Now reports that the first phase would produce 4.8 million gallons daily, compared with the 6.4 million gallons proposed in 2018. That represents a 25 percent reduction in initial production capacity.
The newspaper reports that the facilities would allow later expansion to 6.4 million gallons daily. However, that expansion has no cost estimate yet and would depend on future demand.
California American Water attributes the higher construction estimate to prolonged permitting, legal challenges, rising labor and material prices, and engineering and other project expenses.
The company’s case for desalination.
California American Water says the project remains necessary to address the peninsula’s long-term water needs. The company points to the commission’s 2018 approval and supply estimates showing a water shortfall by 2050.
The utility also says its work with regulators has reduced Carmel River pumping by 75 percent.
Financing proposal addresses customer costs.
California American Water estimates that its proposed financing and rate arrangements could reduce the financial impact on customers by $588 million over the project’s 40-year life.
That figure describes projected savings over decades, rather than a reduction in the $825 million construction estimate.
Monterey County Now reports that the company is seeking state grants and up to $50 million in state revolving-fund loans.
Customer bills face review.
According to Monterey County Now, a company-provided summary projects rates roughly doubling on average across single-family, multifamily and nonresidential customer categories.
Those projections are part of the proposal submitted for regulatory review. The newspaper reports that Monterey Peninsula Water Management District General Manager Dave Stoldt expects the public review to take more than a year, with opportunities to examine effects on different customers.
A separate fight over ownership.
The filing also arrives during a dispute over the water district’s authority to provide retail water service, Monterey County Now reports. That case could open the way for proceedings to acquire California American Water’s local system through eminent domain following voter approval of Measure J in 2018.
The newspaper reports that any effect of the revised desalination estimate on a potential acquisition remains unclear.
