SMWD Delivers Smart Energy Management

The Santa Margarita Water District (SMWD), serving over 210,000 residents across more than 100 square miles in southern Orange County, is meeting rising energy costs head-on through an ambitious, data-driven energy management strategy.

Each year, SMWD uses about 34,000 megawatt-hours of electricity-enough to power 3,000 homes-with a power budget of $9.4 million, representing 7% of the agency's total operating budget. As energy prices continue to climb (a 50% increase in kilowatt-hour costs since 2020), SMWD is taking a smarter approach to usage, rates, and infrastructure.

Foundational Investments
SMWD has already made significant investments in on-site renewable energy. Solar panels at its headquarters offset half of total energy use. The Chiquita Water Reclamation Plant (WRP) uses solar and microturbines to meet approximately one-third of its power needs. To bolster resiliency, battery storage funded by grants has been installed to support operations during Public Safety Power Shutoffs (PSPS).

Load Management and Peak Shaving
"Understanding not just how much electricity is used, but how and when it's used, has been a game changer," says Daniel Peterson, SMWD Regulatory and Logistics Manager. SMWD focused on reshaping its load profile-a move that proved cost-effective. At the Chiquita WRP, the addition of battery storage in 2025 enabled the district to reduce on-peak demand by nearly half-from 900 kW to 460 kW-by storing energy during off-peak hours and using it during high-demand periods. This is projected to save $112,000 annually, or $2.2 million over 20 years.

Rate Optimization
SMWD implemented a three-phase rate optimization strategy:

• Phase 1: Billing Alignment: By moving away from default rates that penalized short, high-demand events, the district saved $375,000 annually.
• Phase 2: Operational Tweaks: Through targeted analysis, SMWD staggered pump operations and shifted energy loads, unlocking an additional $750,000 in yearly savings.
• Phase 3: Regulatory Victory: After long-term advocacy, SMWD gained access to a more favorable electricity rate for its treatment plants, generating $500,000 in annual savings without altering operations.

Another innovative solution was the Split Meter Strategy. A single meter serving both a pump station and reverse osmosis (RO) plant led to occasional demand spikes. By analyzing usage and splitting loads into two meters, SMWD brought both sites under key thresholds, resulting in a $70,000 annual savings.

A Future-Ready Energy Framework
Energy considerations are now integrated into SMWD's system design and everyday operations. Smart pumping practices and tailored infrastructure design help avoid inefficiencies before they occur. With a new data integration platform that tracks real-time usage across 20 meters and two utilities, SMWD can now monitor pump performance, detect anomalies, and inform capital planning.

Looking ahead, SMWD is preparing to launch an Energy Optimization Program focused on diagnostics and benchmarking. This program will lay the groundwork for a comprehensive Energy Master Plan-one based on actual performance data rather than assumptions.

SMWD's approach demonstrates a clear commitment to delivering water services in the most efficient and cost-effective way possible.

Daniel Peterson, SMWD Regulatory and Logistics Manager, presents Energy Management at SMWD: Smarter Use, Smarter Rates, Smarter Future at the Orange County Water Association (OCWA) conference on July 17, 2025.