The San Diego County Water Authority announced Thursday it has finalized a 21-year agreement to sell surplus water to the Western Municipal Water District in Riverside County — a deal expected to generate millions in annual revenue that could help soften future rate hikes for San Diego County water customers.

Under the agreement, Western Municipal, which serves nearly one million residents in western Riverside County, will pay $13.5 million annually for 10,000 acre-feet of water — enough to supply approximately 30,000 homes. The district also made a $40 million upfront payment for future water delivery, providing a buffer in the event of prolonged drought conditions.

For East County residents, including those served by Padre Dam Municipal Water District in Santee, the agreement carries potential financial relief. The Water Authority has worked for three decades to diversify its water supply and expand infrastructure — investments that now allow it to sell surplus rather than let it go unused. Revenue from sales like this is expected to be applied toward reducing pressure on wholesale water rates.

"This agreement is a win for San Diego ratepayers, a win for Western, and a win for Southern California," said Water Authority Board Chair Nick Serrano. "It allows us to maximize the value of the investments San Diego County residents made over decades, strengthen water reliability, and do so in a way that is mindful of affordability and public responsibility."

No new infrastructure is required for the deal — water will be delivered through existing connections within the Metropolitan Water District of Southern California regional pipeline system. The Water Authority projects ample water supply through 2050, even accounting for multiple consecutive dry years, which gives it the flexibility to enter into transfer agreements like this one going forward.