Water authority previews settlement with Metropolitan, says 2026 wholesale rate increase will be about 10.4%

Dan Denham, general manager of the San Diego County Water Authority, told the City Council the authority was asking its board to consider a 10.4% wholesale rate increase for 2026 and described a recent settlement with the Metropolitan Water District he said will provide long‑term rate stability.

Denham framed the request as part of a broader portfolio strategy. “We’re currently sitting at a 10.4% rate increase for 2026,” he said during an hour‑long briefing. He said the authority faces a mix of supply costs — from relatively low‑cost transfers to costly desalination — and that litigation with Metropolitan had been a multiyear drag on regional collaboration and rates.

The settlement Denham previewed, reached after more than a decade of litigation, will not immediately eliminate cost pressures but, he said, should stabilize transportation charges and open opportunities to sell excess supplies. “What we did was stabilize rates at the wholesale level for transportation for 50% of our regional supply,” he said, estimating that change translates to roughly $20 million a year and “about 2 to 3% on the transportation of our water.” Denham said some settlement benefits will appear in 2027 and beyond.

Why it matters: wholesale increases flow through to retail water bills and can affect residents already coping with high living costs. Council members repeatedly pressed CWA leadership on affordability, reserve levels and opportunities to cut nonessential spending. Jordan Moore of the city’s Independent Budget Analyst recommended duties for the city’s representatives on the Water Authority (the City 10), including asking CWA to produce an updated business plan and to better tie expenditures to delivered water.

Council reaction was mixed but focused on affordability. Council Member Bevra Whitburn, who serves as one of the City 10 representatives on the Water Authority board, said she would press for “additional efficiencies that will inure to the benefit of ratepayers.” Council Member Von Wilpert said she welcomed the settlement but warned that a 10.4% increase would be hard for many fixed‑income residents to bear.

Public commenters voiced frustration that long‑standing conservation has not reduced bills for households that saved water. “Do not raise our water rates again,” one resident said during public comment, arguing conservation should lower costs.

CWA also outlined budget actions the authority has taken to reduce rate pressure, including bond refinancing and sales and transfers that the agency said produced roughly $40 million in savings over two cycles. Denham and other CWA staff said they will continue to pursue sales of excess supplies and reprioritization of capital projects to limit future rate growth.

Next steps: the authority’s board will finalize its budget and rate action later in the month; some settlement impacts are expected to show up in 2027. City 10 representatives said they will continue to press for affordability measures and for clearer public outreach about why rates are changing.