A bill that would provide public financing for the Monterey Peninsula's desalination moved closer to passage Wednesday.
The bill, introduced by Sen. Bill Monning, passed the state Senate floor and now heads to Gov. Jerry Brown.
The Monterey Peninsula Water Supply Securitization Act will allow a surcharge to be tacked onto ratepayers’ bills to help finance the desal plant via tax-exempt, “water rate relief bonds.”
Officials say that doing this through public financing will result in lower interest rates and ultimately save ratepayers thousands of dollars.
Under the bill, the California Public Utilities Commission would allow the use of the bonds and the Monterey Peninsula Water Management Water District could then use the proceeds from the ratepayer surcharge as collateral for the bonds.
The funds generated from the surcharge would go straight into a special entity set up to pay for the desalination plant.
“This project will help to address the mandatory water reductions facing the Monterey Peninsula and provide assistance in the development of a desalination plant, as well as conveyance and storage facilities, in conjunction with Cal-Am,” said Senator Monning. “By enabling this alternative financing mechanism to be issued, water rates that are lower than traditional utility financing mechanisms could be realized by water customers."