Temecula moves to buy San Diego’s surplus water, as Arizona weighs cross-state supply alternatives

San Diego’s water agency begins lining up buyers for high-cost supplies

Water managers in Southern California are moving from long-term supply building to a new challenge: what to do with water that has been secured at a premium price when regional demand is not keeping pace. The San Diego County Water Authority has invested for decades in diversifying supplies, including long-term obligations tied to the Claude “Bud” Lewis Carlsbad Desalination Plant, which began commercial operations in 2015. The plant can produce more than 50 million gallons per day, and the water authority has a long-term purchase arrangement that can require a minimum annual volume and allows deliveries up to roughly 56,000 acre-feet per year.

Those commitments helped insulate San Diego County from drought-era shortages but contributed to rising wholesale costs. In parallel, member agencies and city leaders have intensified scrutiny of rate impacts, while the water authority has explored selling or leasing portions of its portfolio to offset costs.

Why Temecula is part of the story

Temecula sits in Riverside County, within the service orbit of major regional wholesalers and treatment systems that can move treated water across city and district boundaries. As local agencies in the Inland Empire seek reliability and manage price volatility, surplus water offers a near-term option: acquiring additional supply without waiting years for new infrastructure to be built.

For San Diego County, a Temecula-area purchase provides a tangible test of whether out-of-area agencies are willing to pay for water shaped by desalination and other high-cost reliability investments. Deals of this kind can be structured as transfers or exchanges rather than physically “shipping desalinated water” out of the region, depending on approvals and operational constraints.

Arizona’s decision point: buy water, fund desalination, or both

Arizona’s interest is tied to tightening Colorado River supplies and the approaching transition to a new operating framework for the basin. State leaders and water planners have been evaluating “augmentation” concepts that would add new water to the system, including seawater desalination projects located outside Arizona in coastal California or Mexico. In late 2025, Arizona’s water-financing board advanced proposals for further development that contemplate public funding support for planning and early-stage work.

At the same time, cross-state purchases of surplus water from established agencies are being discussed as a potentially faster, contract-driven approach—though any arrangement that changes how Colorado River water is accounted for would require multiple layers of review, including federal involvement and approvals by relevant regional water agencies.

Key constraints that will shape whether this expands beyond Temecula

• Cost: desalination-linked water typically carries higher unit costs than many historic Colorado River supplies, raising questions about long-term affordability.

• Regulatory approvals: interstate transactions involving Colorado River accounting can require coordination among multiple states, agencies, and the federal government.

• Infrastructure and operations: transfers may depend on exchange mechanisms and available conveyance capacity, not just the existence of “extra” water on paper.

• Local politics and governance: dissatisfaction over rates inside San Diego County has fueled debate over the water authority’s structure and future, potentially affecting its negotiating posture.

For San Diego, the central question is whether surplus sales can meaningfully reduce the burden of fixed water-supply costs without weakening reliability for local ratepayers.

Temecula’s purchase is a concrete step in a broader Western shift: water agencies that once focused on acquiring supply are increasingly managing the financial and political consequences of reliability investments, while neighboring states weigh whether buying into those investments is cheaper than building their own.