Rancho Water reports unbudgeted PFAS settlement windfall amid groundwater quality challenges

Rancho Water reports unbudgeted PFAS settlement windfall amid groundwater quality challengesThe Southern California utility is navigating lower-than-expected agricultural demand and delayed recycled water maintenance, while pivoting back to native wells following system outages.

An unbudgeted PFAS settlement and higher interest revenues pushed the district's total net income more than $1 million over budget through April 2026.

Overall water consumption tracking nearly 1,000 acre-feet below budget resulted in a $1 million reduction in water purchase costs.

Agricultural demand fell 1,400 acre-feet below projections, while domestic consumption exceeded the budget by 500 acre-feet.

Two major recycled water maintenance projects have been deferred to the next fiscal year following system evaluations.

Groundwater quality issues in the first half of the fiscal year forced the district to temporarily exceed its imported water budget.

Rancho California Water District (RCWD) is tracking a strong financial finish to fiscal year 2026, bolstered by an unbudgeted PFAS settlement and lower operating expenses, despite operational hurdles involving its native groundwater supplies and recycled water system. During a June 4 Finance and Audit Committee meeting, district staff presented financial statements for the 10 months ending April 30, 2026. The district reported operating revenues exceeding budget expectations by over $3 million. Non-operating revenues also tracked higher than anticipated, driven by strong interest revenues and a major, unbudgeted settlement related to per- and polyfluoroalkyl substances (PFAS) litigation. Together, these factors pushed total net income more than $1 million over budget. Operationally, RCWD has had to pivot its water sourcing strategies. The district exceeded its budget for imported water while falling short on native well production. Staff noted this imbalance was caused by water quality issues that forced portions of the groundwater system offline during the first half of the fiscal year. With repairs completed, the district is now increasing its groundwater usage. Staff project native well production will end the year close to its original target, capping further increases to the imported water budget. Overall water consumption is tracking nearly 1,000 acre-feet below budget, primarily due to cooler weather. This reduction is heavily skewed toward the agricultural sector, which utilized approximately 1,400 acre-feet less than projected. Conversely, domestic consumption exceeded budget targets by slightly over 500 acre-feet. The net decrease in demand resulted in source-of-supply water purchase costs coming in nearly $1 million under budget. Operating expenses were further reduced by the deferral of two major planned maintenance projects on the district's recycled water system. Staff explained that weather conditions and ongoing evaluations of the system's overall condition prompted RCWD to postpone the work until the following fiscal year.