Contra Costa WD approves $516m budget amid 47% chemical cost spike and regulatory pressures

Contra Costa WD approves $516m budget amid 47% chemical cost spike and regulatory pressuresThe California utility is navigating severe external operating pressures, balancing a $7.5 million chemical procurement bill and costly environmental mitigation requirements against the staffing needs of a $1.5 billion canal replacement program.

The CCWD board unanimously approved a $516.5 million budget for FY27 and FY28, featuring a 4% overall increase in FY27 driven by a 6% rise in operating costs.

Water treatment chemical costs surged by 47% compared to FY26, with aluminum sulfate rising 47% and sulfuric acid increasing by 22%.

External regulatory drivers include a $4.2 million mitigation credit for an incidental take permit, $800,000 for golden mussel research and response, and new costs for transitioning to zero-emission vehicles.

To support its $1.5 billion Canal Replacement Program, CCWD authorized a $1.3 million federal grant from the Office of Local Defense Community Cooperation for military base site investigations.

The Contra Costa Water District (CCWD) Board of Directors unanimously approved a $516.5 million budget for fiscal years 2027 and 2028 on June 17, as the utility grapples with severe external cost pressures from supply chain volatility and tightening environmental regulations. The FY27 budget reflects a 4% overall increase, driven largely by a 6% rise in operating costs. Director of Finance Herman Williams noted that the sharpest operational pain point is a 47% surge in water treatment and aquatic chemical costs, which will require a $7.5 million outlay for FY27. While some chemical prices decreased, others saw massive hikes, including a 47% increase for aluminum sulfate and a 22% increase for sulfuric acid. The chemical budget also reflects volume increases tied to a safety-driven conversion at the Randall-Bold Treatment Plant, which is transitioning from chlorine gas and aqueous ammonia to sodium hypochlorite and liquid ammonium sulfate. Because of extreme market volatility, CCWD reported it was unable to secure a two-year commitment for chemical pricing, forcing annual procurements. Beyond supply chain inflation, CCWD is facing mounting regulatory and environmental mitigation costs. The budget absorbs a $4.2 million mitigation credit purchase under a 2024 incidental take permit and $300,000 in annual fish monitoring requirements. The utility is also dedicating $800,000 in FY27 to research and response operations for golden mussel infestations. Furthermore, compliance with the California Air Resources Board's Advanced Clean Fleets mandate is driving up vehicle purchasing costs by 30% to 50% over traditional diesel units, alongside new charging infrastructure investments. Despite these operating pressures, CCWD is expanding its workforce to manage a massive long-term capital initiative: the 10-year, $1.5 billion Canal Replacement Program. The budget adds multiple project personnel to support the effort. To help offset capital costs, the board authorized a $1.4 million financial assistance agreement with the federal Office of Local Defense Community Cooperation. The agreement includes a $1.3 million grant to fund geotechnical and site investigations for the canal replacement segment that crosses the Military Ocean Terminal Concord (MOTCO) base, supporting 30% design completion by early 2028. Looking ahead, total FY28 expenditures are projected to decrease by 3% overall, largely due to debt service declining to $21 million following the maturity and payoff of Series T bonds in FY27.