Rancho Water pushes MWD for alternative financing on $9.8 billion Pure Water project

Rancho Water pushes MWD for alternative financing on $9.8 billion Pure Water projectConcerned by the massive unfunded capital requirements of the regional water recycling program, the Rancho California Water District is advocating for a voter-approved general obligation bond to spare retail customers from compounding rate hikes.

MWD's proposed Pure Water Southern California project carries an estimated $9.84 billion capital cost at full 150 MGD buildout, with only $210 million secured to date.

Rancho Water's committee approved drafting a letter to MWD demanding a complete cost allocation methodology before incremental project momentum locks in retail rate impacts.

District leadership argues that financing a regional "backbone" facility through volumetric water rates unfairly burdens ratepayers, proposing property tax-based general obligation bonds as an equitable alternative.

The district plans to coordinate its formal intervention with wholesale partners Eastern Municipal Water District and Western Municipal Water District.

The Rancho California Water District (Rancho Water) is mobilizing to challenge the Metropolitan Water District of Southern California (MWD) over the financing strategy for its proposed Pure Water Southern California program, a $9.84 billion regional recycled water initiative. During an August 27, 2026, Engineering and Operations Committee meeting, Rancho Water officials unanimously supported drafting a formal letter to MWD to demand a complete financing plan and cost allocation methodology before the mega-project advances further. The district intends to submit the letter through its wholesale partner, the Eastern Municipal Water District, and plans to coordinate with the Western Municipal Water District to amplify regional concerns. Pure Water Southern California, developed in partnership with the Los Angeles County Sanitation Districts, aims to produce up to 150 million gallons per day (MGD) of purified water at full buildout. While MWD's Board certified the project's Final Environmental Impact Report in early 2026, it has not yet authorized full-scale construction or long-term financing. However, Rancho Water officials expressed concern that MWD's incremental approvals are generating unstoppable institutional momentum. Of the estimated $9.84 billion total price tag, only $210 million—or 2.1 percent—has been secured for Phase 1 design work. Without massive state or federal intervention, the remaining 97.9 percent of capital costs, plus $89 million to $245 million in annual operating expenses, would be passed through MWD’s 26 member agencies to retail customers via volumetric rate increases. MWD’s adopted 2027–2028 budget already includes a 6.2 percent overall rate increase in both years, partially tied to Phase 1 planning for the Pure Water program. During the committee meeting, members argued that funding a regional "backbone facility" exclusively through volumetric water rates unfairly burdens specific ratepayers, as water usage varies significantly across the service area. Instead, committee members advocated for evaluating a voter-approved general obligation bond. "If this is supposed to be a fundamental backbone facility for water supply in Southern California, why is it on water rates?" one committee member noted, comparing the proposed funding structure to historical infrastructure investments like the Colorado River Aqueduct, which utilized property taxes. "That seems like a more appropriate way. That way the whole area that's benefiting from the fact of having this support the economy, pay for it." The committee unanimously advanced the initiative to the full board for final approval. Once approved, the district will formally urge MWD to keep retail agencies engaged as equal partners in evaluating both the funding strategy and the pace of the project's implementation.