Mojave Water Agency launches strategic financial plan to tackle 'revenue equity' and discretionary funding

Mojave Water Agency launches strategic financial plan to tackle 'revenue equity' and discretionary fundingThe California wholesaler has approved a $147,715 contract with Water Resources Economic LLC to develop a new financial framework, focusing on how to allocate discretionary revenues and update the agency's financial model.

The Board of Directors approved a $147,715 professional services agreement with Water Resources Economic LLC for Phase 1 of a strategic financial plan.

The plan will define "revenue equity" to determine whether specific water projects should be paid for by a single planning area or the full region.

A primary objective is establishing guidelines for allocating discretionary revenues, particularly the funds generated from the agency's lease water.

Phase 1 deliverables, expected by spring 2027, include updating the current financial model, finalizing overhead methodologies, and setting pricing objectives.

Mojave Water Agency is overhauling its financial framework to address how it allocates costs and discretionary revenues across its various planning areas. On July 23, 2026, the Board of Directors unanimously approved a $147,715 professional services agreement with Water Resources Economic LLC to launch Phase 1 of a new strategic financial plan. The financial overhaul will run parallel to the agency's ongoing master plan study. A major driver for the new financial strategy is the need to establish clear, equitable policies for allocating the significant discretionary revenue the agency generates from lease water. Sanjay Gaur of Water Resources Economic LLC presented the phased approach to the board, noting that the agency operates a highly complex system with diverse revenue streams and legal obligations. Phase 1 will focus on defining "revenue equity" and establishing pricing objectives for future revenue streams. Gaur told the board that the study will address two critical policy questions: when the agency should pay for projects using discretionary revenue versus charging customers through existing rates or new revenue streams, and when a project should be paid for by a single planning area rather than the full regional service area. "This is the foundation of the strategic plan where we get guidance from you about how do we allocate discretionary revenues and how do we find revenue equity in your service area," Gaur said during the presentation. Phase 1 deliverables, which are slated for completion by the spring of 2027, include updating the agency's current financial model, finalizing overhead cost methodologies to determine the true cost of activities, and drafting policies for discretionary revenue allocation. Board members emphasized the importance of ensuring the new financial framework strictly adheres to California's complex legal parameters for water rates. During the discussion, the board president noted that the plan will help the agency navigate the limitations of Proposition 218 and Proposition 26, ensuring that infrastructure investments and cost allocations remain legally defensible. Following the completion of Phase 1, subsequent phases of the study will evaluate potential rate structure alternatives, assess customer rate impacts, and update the agency's reserve policies by the fall of 2027.