On March 19, Western Water and the San Diego County Water Authority signed a water exchange agreement that will provide benefits across much of Southern California. The agreement is conservatively projected to save Western Water customers $49.1 million, provide the San Diego County Water Authority an ongoing revenue stream of more than $13 million per year and a one-time payment of $39.1 million. The Metropolitan Water District of Southern California will continue to receive full cost of moving water for member agencies and gain an important tool in long-range planning for water supply resiliency in Riverside and San Diego counties.
This agreement represents a major change in thinking among water agencies, beginning with a June 2025 shift in Metropolitan Water District's rules that for the first time allowed exchange of water between Metropolitan member agencies. Rather than competing and being territorial, as has been traditional among water agencies, Western Water and the San Diego County Water Authority worked in a spirit of cooperation and mutual support to negotiate this first-of-a-kind agreement.
The agreement becomes effective April 1 of this year and runs through 2047. It can be extended to 2077. The key deal points are:
- Western Water will purchase 10,000 acre-feet of water from the San Diego County Water Authority per year.
- If available, Western Water can purchase up to 5,000 additional acre-feet per year for use by its wholesale customers, including Riverside Public Utilities.
- If additional water is available, Western Water has the right to take it at the price offered by other water agencies.
- Western Water will make a one-time pre-purchase of 30,000 acre-feet of water for delivery at later dates to be selected by Western Water. The pre-payment will be made in four equal annual payments beginning in 2026. Water may be taken in amounts up to 10,000 acre-feet per year prior to the expiration of the agreement.
A major benefit of this agreement is that the water exchange is considered local water and cannot be interrupted in the event of Metropolitan Water District curtailments, as sometimes happens in prolonged drought conditions.
Key economic components of the agreement are:
- Western Water will pay $1,304 per acre-foot for the 10,000 acre-feet of the 2026 annual purchase and for all 30,000 acre-feet of pre-purchased water.
- The cost of water purchased under the agreement will increase with inflation, estimated at 4% per year.
- Water purchased under this agreement will displace purchases from Metropolitan Water District. Metropolitan's rates are projected to increase at the rate of inflation plus the cost of needed infrastructure construction and maintenance. Current projections are that Metropolitan's rates will increase at 9% per year for the next 10 years.
- In the early years, water purchased under this agreement will be higher than a purchase from Metropolitan, but in later years will be significantly less expensive.
- The crossover point is estimated to be 2031.
- The additional cost in the early years is viewed as comparable to an infrastructure improvement. The additional cost will be covered by property tax revenue Western Water receives. There will be no impact on customer rates.
The chart below illustrates the projected cost, savings and crossover point between cost and savings.
This agreement will provide Western Water customers significantly more water security and drought resiliency and save more than $49 million in water costs by 2047. If the agreement extends to 2077, the savings will be dramatically higher.
