In a move that could quietly rewrite Southern California’s water playbook, the San Diego County Water Authority yesterday unanimously approved a 21-year agreement to sell surplus water to Riverside County's Western Municipal Water District. Officials say the long-term outbound sale, a first for the agency, will pump major new revenue into San Diego’s regional water system and change how imported supplies are managed. The deal locks Western into annual purchases and gives the Water Authority both upfront cash and predictable payments over time, which board members cast as a short-term fiscal cushion and a test run for more water trades just as big rate decisions loom.
As reported by The San Diego Union-Tribune, the pact calls for Western to buy 10,000 acre-feet of water each year, roughly 3.3 billion gallons, with an upfront payment of about $39 million for an initial block of 30,000 acre-feet. The Water Authority estimates the arrangement will generate about $100 million in the first five years and roughly $330 million over the full 21-year term. “This is going to be groundbreaking for them as much as it is for us,” General Manager Dan Denham told the paper, while Board Chair Nick Serrano said the board would “have a holistic conversation” about both short- and long-term policy choices tied to the new money.
Why Western bought it
Western Municipal Water District serves about a million people across western Riverside County and leans heavily on imported water. Its own budget documents show that rising pass-through charges from the Metropolitan Water District have been putting serious pressure on local rates. According to the Western Municipal Water District, those mounting costs have pushed leaders to lock in forward-priced supplies and use financial hedges where they can. The San Diego purchase gives Western immediate water volume and some pricing predictability while the agency continues to build up local sources and recycling projects.
Why it matters to San Diegans
The timing is not accidental. The Water Authority has projected that its wholesale charges could climb by roughly 38% to 65% over the next decade, and staff are expected to roll out proposed rate hikes this spring. The agency has already signed a preliminary federal agreement that would allow potential interstate water sales and says it plans to chase similar deals with other agencies, arguing that extra revenue could help stabilize rates and reduce volatility for local customers. At the same time, the City of San Diego’s nearly $1 billion Pure Water recycling program, slated to come online in 2027, is expected to trim the Water Authority’s sales by around 15%, a shift that complicates how future bills pencil out, The San Diego Union-Tribune reported.
What's next
Water Authority staff say they hope to have additional agreements in play and factored into the financial picture before formal rate hearings this summer, so any new income is fully reflected in the rate model. The looming debate in boardrooms around the county will center on how much of the Riverside deal’s proceeds should go toward softening proposed hikes versus boosting reserves or paying down debt.
Legal and regulatory note
The sale rests on a recent legal reset. A 2025 settlement between the Water Authority and the Metropolitan Water District ended years of litigation and opened the door for San Diego to market conserved or surplus supplies to other agencies inside Metropolitan’s system, according to a report that the two agencies ended years of litigation, per Hoodline. That settlement framework, paired with the preliminary federal accord, is what officials say makes cross-county water trades like the new Riverside deal both possible and timely.
