Governor Gavin Newsom has signed SB 952, legislation intended to give the California Department of Water Resources (DWR) more flexibility as it moves the State Water Project toward a 100% renewable and zero-carbon electricity portfolio. Newsom signed the measure from Sen. John Laird on August 31. The change does not relax California’s 2035 clean-power requirement for state agencies. Instead, it changes how DWR can assemble and manage the portfolio needed to reach it. 

Water Conditions Create an Unusual Procurement Problem

The State Water Project operates more than 700 miles of canals, pipelines, reservoirs, pumping plants, and hydroelectric facilities that move water across California. DWR describes the project as the largest single electricity consumer in the state, with pump loads ranging from roughly 6 million to 9.5 million MWh a year, depending on water conditions. Unlike a conventional industrial facility with relatively predictable annual demand, the amount of electricity required to move California’s water can fluctuate sharply with hydrology. That creates a real procurement challenge as DWR approaches the requirement that renewable and zero-carbon resources supply 100% of electricity procured for state agencies by the end of 2035. The State Water Project already generates substantial hydroelectric power itself, and DWR says approximately 55% of its power comes from its own carbon-free hydroelectric generation. SB 952 addresses the remaining gap by requiring DWR to consider portfolio diversity, resource type, geographic location, and typical peak operating hours when purchasing new clean-energy resources, a more targeted approach than the compliance-first playbook other California clean-energy legislation has favored recently. That language moves the procurement discussion beyond simply acquiring enough renewable megawatt-hours. DWR can more explicitly evaluate whether resources are available where and when the State Water Project actually needs them.

Excess Clean Power Can Be Banked After 2035

Another significant provision begins in 2036. If DWR procures more renewable or zero-carbon electricity than the State Water Project needs during a given year, that excess can be applied toward a future year’s obligation. The environmental and renewable attributes associated with that electricity must be retired rather than transferred or resold. For the State Water Project, that effectively creates a mechanism for managing year-to-year energy variability. State Water Contractors, which sponsored the legislation, argued during legislative review that annual electricity needs can average between 6.5 million and 9 million MWh and that hydrological variability makes long-term energy planning difficult. The organization said allowing excess procurement in lower-demand years to offset obligations in higher-demand years could reduce costs while maintaining the clean-energy requirement, a variability problem that mirrors what utilities elsewhere are already confronting as water and energy costs collide.

Cost Estimates Run Into the Billions

Cost is not a minor consideration here. A Senate committee analysis reviewed during the bill’s progress noted that the State Water Project’s existing operational costs already average about $1.3 billion annually and that moving toward a fully zero-carbon electricity supply is expected to add to that baseline substantially. SB 952, therefore, represents a somewhat different phase of California’s energy transition. The state is no longer only setting clean-energy targets. It is beginning to refine the procurement rules around how large, variable electricity users can meet those targets without unnecessarily increasing infrastructure and energy costs, a challenge shared by water utilities managing their own aging infrastructure and energy budgets simultaneously.