County Water Authority Approves 30-Year Contract For Desalinated Water
Friday, November 30, 2012
Aired 11/30/12 on KPBS News.
Despite opposition from environmentalists, the San Diego County Water Authority Board of Directors today overwhelmingly approved a 30-year deal to take desalinated water from a future plant in Carlsbad.
Despite opposition from environmentalists, and four of the region's 24 water agencies, the San Diego County Water Authority Board of Directors today overwhelmingly approved a 30-year deal to take desalinated water from a future plant in Carlsbad.
Water authority officials say converting seawater will provide the region with a water supply more reliable than imports from the Metropolitan Water District. The 48 million gallons of desalinated water a day provided by the contract would make up between 7 and 10 per cent of San Diego County's total water supply.
San Diego Mayor Jerry Sanders, in this, his last week in office, spoke to the board, and called the deal "a historic deal that will make our future more secure.''
The water authority board voted in favor of the purchase agreement by a margin of 85 percent to 10 percent, with the rest abstaining.
"We are now putting another big piece of our diversification plan in place that will help protect our region's $186 billion economy from the potential shortages and the uncertainty created by heavy reliance on imported water,'' said Thomas Wornham, chairman of the Water Authority's Board of Directors.
Authority Deputy General Manager Sandy Kerl told City News Service that desalinated water will be pricier than imports initially, but the cost of MWD water is expected to climb at a faster rate. Over the last decade, MWD import prices have risen 7.85 percent annually, she said.
CWA General Manager Maureen Stapleton told KPBS the authority estimates desalinated water will be more expensive than imported water until about 2026, after which it should be cheaper. She said the Bay Delta, which provides much of California's water, is extremely fragile.
"Depending on the solution and the cost of that solution , the crossover could be sooner," she said.
Opponents said unpredictable increases in energy costs could make desalinated water costs much higher than currently estimated since desalination is an energy intensive process.
"The way the energy costs become aligned become future obligations," said Mitchell Dion, representing the Rincon Water Authority, one of four that voted against entering the contract. " Those obligations don't have caps. The feeling is the project is just too expensive. Are we trading Met for SDG & E ?"
Dion was referring to the Metropolitan Water District which controls San Diego's imported water. San Diego's water authority has been in legal battles with MWD over the cost of water for years.
"The Water Purchase Agreement protects ratepayers from cost overruns and construction problems -- but it does allow for increases due to certain expenses such as electricity and uncontrollable events such as acts of terrorism,'' Kerl said. "The contract also contains caps that limit increases in any given year, and to no more than 30 percent over the life of the 30-year agreement.''
The Surfrider Foundation, which strongly opposes the project, said it would be expensive for ratepayers and harmful to the marine environment.
On Monday, the Surfrider Foundation's San Diego chapter released a consultant's report asserting that the 30 percent cap in rate increases exposes ratepayers to too much risk. The report also said the cost of electricity needed to run the plant will rise significantly as utilities try to meet regulatory demands for renewable energy.
According to the authors, the debt structure is back-loaded with planned 2.5 percent annual cost increases.
Joe Geever, the water programs manager for Surfrider, said environmental organizations prefer conservation and recycling, otherwise known as indirect potable reuse, or IPR.
But supporters like Jim Madaffer, a board member representing the City of Dan Diego, said desal is the best option.
"I'd say desal is probably five to fifteen year ahead of IPR," Madaffer said, "and I don’t think we have another 15 years to wait to risk our water suppl. We can't conserve water that we don’t have, in fact, of all the water solutions that I’ve heard, only desal is the one that creates new water."
The technology is still new but Peter MacLaggan of Poseidon said the contract is designed to protect ratepayers.
"The water authority doesn’t pay for any water until its produced and delivered into their system meeting quantity and quality specifications," Maclaggan said, "so if anything goes wrong in the construction phase, or the operations phase, cost overruns of any nature are covered by the private sector partner in this relationship, which is Poseidon."
McLaggan said the plant should be up and running within four years.
Poseidon Resources hopes to build the desalination plant adjacent to the Agua Hedionda Lagoon and have it operating by 2016. At full steam, it would produce about 50 million gallons of fresh drinking water per day through reverse osmosis.
Now that the plant is approved, Poseidon and the SDCWA will go to the bond market for financing. According to the water agency, construction would then commence on the plant and a 10-mile pipeline to connect with its aqueduct in San Marcos.
Several members of the board, however, said it was time to move ahead on all fronts, including recycling water and desalination, and make use of the vast source along the coast.
SDCWA board member Jim Madaffer equated the purchase agreement to obtaining an "insurance policy'' against future problems with water supplies.
How the costs will be distributed has yet to be worked out. The board will work with a consultant on 9 options presented for a cost of service agreement. As one board member put it, "Now the fight begins."