Diablo Grande escapes threat of water shutoffs as provider's $14 million debt forgiven

For nearly a year, roughly 600 homes in the Diablo Grande community of Stanislaus County faced the possibility of having their water shut off as Western Hills Water District and the Kern County Water Agency battled over a $14 million debt tied to a decades-old water contract.

Now, residents are breathing a sigh of relief.

"The threat of our water being shut off has now been eliminated," Western Hills Water District Board President Mark Kovich said.

The debt stems from a contract signed about 25 years ago, when Diablo Grande was envisioned as a much larger development. Although only about 600 homes were built, the district remained obligated to purchase far more water than the community actually uses.

Under the new agreement, the $14 million debt will be forgiven, and Western Hills will instead buy water based on the community's actual demand.

"We will purchase water directly from the agency based on our actual needs, with an option to purchase water for additional development," Kovich said.

To keep water flowing while negotiations continued, the district last year quadrupled its monthly base rate to $568.

Now, residents are already seeing some relief. The base rate has dropped by about $100 per month, and Kovich said a new rate study could reduce it even further.

"The rates will be under $400 for the base rate, and we will be moving to a fixed usage rate," Kovich said. "But it'll never be at the pre-2025 levels until we can, in the long term, have further development."

Resident Debbie Antigua remembers worrying her family could lose running water during the holidays.

"I remember it was Christmas time, right? And the community at that time had no idea if they were going to go into Christmas and by New Year's not have water," she said.

Kovich said attracting new development will ultimately be key to lowering rates further by spreading the cost of the water system across more customers.

"This is a long haul. It's going to take years to get this totally turned around," he said.

The district is expected to present its new rate study on July 18.

While water bills remain significantly higher than they were before the dispute, residents who spent months wondering whether their taps would run this summer are now seeing lower rates—and no longer facing the threat of losing water altogether.