California American Water files updated Monterey desalination costs with CPUC

what happened

California American Water, a subsidiary of American Water, has submitted an application to the California Public Utilities Commission (CPUC) with updated cost estimates for the desalination facilities of the Monterey Peninsula Water Supply Project. The filing also outlines a low-cost financing framework and a proposal for how the project would be treated in customer rates.

The total construction estimate now stands at $825 million. The company said lengthy approvals, permitting and legal challenges have extended the timeline and exposed the project to labor and material cost increases. California American Water President Sarah Leeper said: "We are taking steps to pursue alternative sources of financing to minimize the costs and protect affordability for our customers." The company estimates that its proposed financing and ratemaking measures would reduce the impact on customers by $588 million over the project's 40-year life.

The company says it will keep working with the CPUC and state and local leaders on further cost reductions, and it continues to view desalination as the best technical solution for the region's water supply. The information was published by TradingView, citing a press release distributed by PRNewswire.

why it matters

For markets the news is mainly local, concerning regulated water service in California. The more relevant item for investors is how the CPUC treats the proposed financing and rate recovery, since that will determine how much of the cost falls on customers and on the company's financial results.

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