American Water submits $825 million Monterey desalination cost plan

American Water ($AWK)’s California subsidiary submitted revised costs and financing proposals for the Monterey Peninsula desalination project to state utility regulators. Its construction estimate is now $825 million, reflecting a prolonged permitting and litigation process, higher labor and materials costs, and engineering, procurement and legal expenses. The application also proposes how those costs would be treated in customer rates.

California American Water estimates that its proposed financing and ratemaking measures could reduce the impact on customers by $588 million over the project’s 40-year life. That figure is an estimated long-term customer benefit, rather than a reduction already secured in the construction budget. Regulators must evaluate the new proposals. The project is intended to diversify the peninsula’s water supply and reduce dependence on constrained existing sources, but the filing does not announce construction completion or final financing approval.

Sources:

• PR Newswire