Contra Costa Water District adopts $1.7B capital plan as canal replacement and golden mussels drive up costs

Contra Costa Water District adopts $1.7B capital plan as canal replacement and golden mussels drive up costsThe California utility's newly approved 10-year Capital Improvement Program relies heavily on debt financing to fund the early phases of a $2.6 billion canal replacement, prompting projected rate hikes of 4% to 6% annually.

The FY2027-2036 CIP includes $1.2 billion in funded projects, with $922 million slated for debt financing.

Phase 1 of the multi-generational Canal Replacement Program will cost an estimated $1.3 billion, pushing long-term debt service to 30% of the district's revenue requirements by 2060.

The district is allocating $750,000 in FY2026 and a $5.6 million placeholder in the CIP to evaluate and construct capital improvements to combat a golden mussel infestation.

The Contra Costa Water District (CCWD) board adopted its $1.7 billion Capital Improvement Program (CIP) and Financial Plan for fiscal years 2027 through 2036 during its March 4, 2026, meeting. The 10-year plan outlines $1.2 billion in funded Priority 1 and 2 projects, heavily shaped by the utility's massive Canal Replacement Program and emerging operational challenges from invasive species. Assistant General Manager of Planning and Administration Jeff Quimby detailed the financial requirements of the plan, noting that all funded projects, operating costs, and debt service can be covered with planned revenue increases ranging from 4% to 6% per year for both treated and untreated water. The primary driver of the capital spending is the Canal Replacement Program. The total cost across all phases is currently estimated at $2.6 billion. Phase 1 of the program carries an estimated cost of $1.3 billion with a construction period spanning more than 10 years. Approximately half of the Phase 1 construction falls within the new 10-year CIP window. To support the massive infrastructure overhaul, the CIP projects $922 million in debt-funded projects, with $920 million of that directly associated with the canal replacement. The district assumes debt will be taken out at a 4.5% interest rate over 30 years. Quimby noted that at the peak of projected debt service, around the year 2060, debt will account for approximately 30% of CCWD's overall revenue requirement, up from the current 15%. Beyond the canal, the district is also grappling with the financial impact of a golden mussel infestation. In the near term, CCWD projects $750,000 in FY2026 expenditures for dive services, underwater facility cleaning, water quality sampling, and new sampling equipment at its Delta intakes. Operating costs are expected to increase by $300,000 to $500,000 annually to manage the invasive species. Looking ahead, the FY2027 CIP includes $400,000 for a study to evaluate long-term capital improvement options for mussel management, alongside a $5.6 million Priority 3 placeholder for future capital projects. Other notable adjustments to the CIP include a $3.8 million increase in fleet and vehicle replacement costs, driven largely by state fleet electrification regulations and the higher cost of electric vehicles. The district also increased its future water supplies placeholder by $8.6 million to accelerate the purchase of additional supplies through water transfers, reflecting updated studies indicating that potential supply shortfalls may occur sooner than previously expected.