Valley Water tells Cupertino council multibillion‑dollar projects and dam retrofits are driving wholesale charge increases

At the Nov. 4 Cupertino City Council meeting, Santa Clara Valley Water District officials warned that a multibillion‑dollar capital program — including dam retrofits and a proposed purified water project — is a key driver of projected wholesale charge increases that will affect local retail water bills.

"One of our most expensive improvements will be to our dams," Aaron Baker, Valley Water chief operating officer, told the council, citing an estimated $3.4 billion cost to retrofit aging dams. He said the district is also pursuing a purified water project to increase drought resilience, with an estimated cost near $2.6 billion.

Darren Taylor, Valley Water chief financial officer, presented the district's water‑charge projection and explained that the board's recent decision to suspend the Pacheco Reservoir expansion reduced the district's previously projected 9.9% annual increases to about 9.2% through fiscal 2030. Taylor said the Pacheco suspension did not proportionally cut near‑term increases because the project previously counted on a $500 million California Water Commission grant and a flexible WIFIA loan structure that pushed principal repayments into later years.

Taylor also reviewed the district's affordability and cost‑containment efforts. He said Valley Water budgets a $1 million water rate assistance program administered through Sacred Heart Community Services, has paused 45 positions districtwide (saving approximately $1 million per month), deferred some capital projects and has applied for about $1.3 billion in low‑cost federal loans to reduce rate pressure.

Council members asked about operational cost reductions beyond grants and hiring pauses. Baker and Taylor said officials are tightening capital‑project controls, pursuing grants and low‑cost financing, and trimming operations where feasible. Baker invited council members to Water 101 tours and described Anderson Reservoir as the district's largest single storage facility (roughly 100,000 acre‑feet) and a critical piece of the county system.

Why it matters: Valley Water is the primary wholesale supplier for Cupertino's retailers; wholesale charge increases typically flow through to customers via local water utilities. Council members pressed district staff on affordability for fixed‑income residents and on options to reduce costs through project management, grants and regional partnerships.

What comes next: Valley Water will continue refining its rate projections as project scopes, grants and loan terms evolve; the council was provided the district's projections and contact information for follow‑up questions.

Direct quotes in reporting above are taken from Valley Water presenters at the council meeting.