Tag Archive | "Carlsbad"

Water Flash: Poseidon Carlsbad Vote Passes


Meeting in progress to considering voting for or against a water purchase agreement with Poseidon Resources Inc. for desalinated water from its proposed $1 billion project in Carlsbad, San Diego County. Photo: Debbie Cook

Public comments have wrapped up and at the San Diego County Water Authority special board meeting to consider a 30-year water purchase agreement with Poseidon Resources Inc. to supply up to (but as yet unknown) 56,000 acre feet of water for San Diego County by desalinating up to 100 million gallons of ocean water to turn it into 50 million gallons of drinking water each day from off the coast of the city of Carlsbad.

Supporting the $1 billion project: big business interests, politicians, chamber of commerce, labor etc. Opposed: environmentalists, ocean users and activist rate payers. About evenly divided so far. The board room is full, about 160 people in attendance. Locals speaking: former Huntington Beach mayor Debbie Cook, former Fountain Valley mayor Gus Ayer. You can listen to the arguments pro and con and to the subsequent vote online at http://www.sdcwa.org/meetings-and-documents. More later.

Update: Board discussion is underway now. “Direct the General Manager to refer to nine Carlsbad Desalination Rate Structure  Alternatives to the Cost of Service Consultant and return to the Board with a recommended alternative to allocated the cost of the Carlsbad Desalination Project: Staff Recommendation: Approve the submission of nine requested Carlsbad Desalination Rate Structure Alternatives to the Cost of Service Consultant.”

Vote on motion by Director Mudd, 2nd by Boyle: 95.85 % of the vote cast and passes unanimously. Only 2 of the 24 water agencies under the SDCWA umbrella have signed a memorandum of intent to buy water to be produced from the the project.

Under consideration: Adopt resolution approving: 1) Water Purchase Agreement with Poseidon Resources; 2) Design Build Agreement; 3) Agreements necessary to accomplish tax exempt project financing through the California Pollution Control Financing Authority; 4) Adjustments to the Capital Improvement Program Budget; 5) Supporting contracts and contract amendments; 6 Other actions necessary for implementation of the Carlsbad Desalination Project; Staff recommendation: approve.

Discussion ongoing.

Vote taken on Water Purchase Agreement passes with 85 percent of the vote (vote is weighted according to property values in each district).

Document room. Photo: Debbie Cook

 

 

San Diego County Water Authority meeting underway (11/29/12): Photo: Debbie Cook

Artist’s conception of proposed Carlsbad ocean desalination plant.

Posted in Energy, Environment, Headlines, Poseidon, WaterComments (4)

Dead in the Water? Requested Subsidy for Surf City Desal Project Stirs Debate


By John Earl
Surf City Voice

What is the future of seawater desalination in California?

As of 2006, 22 desalination plants had been proposed for construction along the California coast between San Rafael in the north to Carlsbad in the south. Today, only nine projects are still in the running, and even those are on shaky ground, according to an analysis by the Desal Response Group, a statewide organization generally opposed to ocean desalination.

Critics of ocean desalination (desal) say that the water industry’s dream — shared with evangelical zeal by a growing cabal of public water officials — of sprinkling the coast with desalination plants is dead in the water.

As proof, they point to spiraling costs, lack of financing, stalled technology, and higher than average water supplies after the end of the California “drought.” They say that there are underutilized and much more cost-efficient alternatives such as conservation, increased water collection and waste water recycling – minus seawater desal’s high environmental costs.

That’s why desal critics are upset after a June 6 vote by the Municipal Water District of Orange County (MWDOC) to send a letter to its umbrella agency, the Metropolitan Water District of Los Angeles County (MET), to request $350 million in funding support for the Huntington Beach Desalination Project that Poseidon Resources Inc. wants to build on Pacific Coast Highway and Newland Avenue.

At an estimated construction cost of $700 (according to a recent Costal Commission analysis), the plant would produce 50 million gallons a day or 56,000 acre feet per year of drinking water, 8 percent of Orange County’s supply. The plant would share the seawater intake pipes currently used for cooling by the AES power generating plant.

Poseidon wants to build a nearly identical desal plant in Carlsbad in San Diego County.

The proposed taxpayer-funded subsidy, says the letter, which was written June 23 and obtained by the Voice, would help MWDOC’s agencies to “defray” the high cost of desalinated water—which is generally two to four times higher than other sources.

The subsidy would go through MWDOC’s agencies which would in turn pay it directly to Poseidon over 25 years at $14 million per year in return for water delivered.

Largely funded by taxpayers outside of Orange County who won’t use the water, the subsidy would artificially lower the cost of Poseidon’s desalinated water, which would still probably not be competitive with the cost of water from other sources, including imported water. Desal advocates say that technological improvements for desalination and rising costs of imported water will cause prices to crisscross in the near future, but those improvements show no signs of arriving soon, if ever.

A pro-industry report published in 2004 by the federal government concluded that the invention of cost effective desal technology would require a huge influx of government subsidies to fund the research and development that the industry is lax in doing itself. Even then, it would take over 20 years to make seawater desal competitive, the report estimated.

Without huge public subsidies, Poseidon cannot attract the private investors and get permission to pass tax free bonds also needed to finance the construction of its Huntington Beach plant. To the point, without subsidies—and based on past experience $350 million would not be nearly enough—Poseidon’s HB plant will be out of business.

That is exactly the scenario that played out last year for Poseidon’s proposed desalination plant at Carlsbad in San Diego County. It would be nearly identical in size and type and has received all of the necessary permits but stalled due to lack of financing and increased cost projections for the price of its water.

As reported last June by the Voice, a memo from the city manager Peter A. Weiss of Oceanside, one of nine water San Diego County agencies that had signed water purchasing agreements with Poseidon at that time, pointed out that Poseidon would need $630 million in government financial assistance.

Scott Maloni of Poseidon Resources Inc.

Poseidon's VP Scott Maloni says the debate is over. Photo: Arturo Tolenttino

“In the past few months it has become apparent that Poseidon’s cost of water is going to be greater than originally proposed,” Weiss wrote. “To make the project viable, Poseidon needs subsidies from the San Diego County Water Authority (CWA) and Metropolitan Water District.”

But $630 million was too much money and a lawsuit filed by the city of Carlsbad against the MET had effectively canceled the larger of the two subsidies anyway. So the CWA decided that the only way to keep the project alive was by spreading the costs to all 26 of its member water agencies rather than the original nine with options to buy the desal plant from Poseidon later on.

That’s exactly the same arrangement that MWDOC will seek for the Huntington Beach plant, according to MWDOC’s General Manager, Kevin Hunt.

With MET’s subsidy to the CWA now off the books, Hunt decided that now is a good time for MWDOC to put a claim on the $350 million on behalf of its 28 agencies. So far, not a single one of them has signed on to buy Poseidon’s water, but Hunt believes that, since the MET will be looking at budget priorities next year, now is a good time to make the request.

The subsidy has always been the 1,000 pound gorilla in the room, although previous Huntington Beach city councils and the mainstream media chose to ignore it. But after years of project delays that were mostly self inflicted, and as the time comes for Poseidon to fish or cut bait, the company’s appetite for public assistance can no longer be hidden and has become a sore spot for the god of the sea.

But before voting to approve and mail the letter that it had not read, the board gave instructions to spin the subsidy from the publicly financed project that it is into the 100 percent privately funded project that Poseidon and supporters have always bragged it is.

Director Brett Barbre, representing parts of northern Orange County, started the impromptu skit, asking Hunt:

Does the $250 [per acre foot] go to Poseidon?

Hunt: No.

Barbre: Or does it go to the water district?

Hunt: The $250 goes to the water authority and its member agencies.

Barbre: Those that are actually purchasing the water?

Hunt: Whenever there is a subsidy, it goes to the public agency, not to the –

Barbre: It’s a big distinction.

Member Susan Hinman from south Orange County wanted and received assurance that Barbre’s spin would be applied to the letter before it was sent. “I feel uncomfortable about this,” she said. “I don’t see a copy of the letter and is there any reason why this can’t be delayed until the next committee meeting with a copy of the letter with the wording that you’re expressing,” she asked Hunt.

But Hunt’s other reason for rushing the letter through is to help Poseidon, which is years behind in answering basic questions put to it by the Coastal Commission, to “get the ball rolling.” Three to six months more for needed staff meetings with the MET would occur before the issue is placed on the agenda for vote, Hunt said.

Jack Foley, MWDOC’s appointed representative to the MET, concurred with the need to create confidence in Poseidon’s project by showing the Coastal Commission and investors that the company’s Surf City desal plant “has a real future” with actual water to sell.

When challenged on the real reason for the subsidy—to attract construction money—Foley stuck to the official story, that it will merely assure investors that there is a buyer for the project over the long term, denying the board’s own admission (in its soon to be sent letter) that the money was needed to defray the [highly uncompetitive] cost of Poseidon’s water.

The subsidy’s true purpose has been an open secret for a decade, but a report last year by the DC Bureau – based on interviews with government and Poseidon officials – spelled out in detail how the previously approved but now revoked subsidy for Poseidon’s identical Carlsbad desal project would have directly benefited the company by reimbursing it, at the company’s request, for construction costs plus interest.

Of course, Poseidon vice president Scott Maloni, who was at the meeting, still boasts that the HB desal plant is a privately funded project and is badly needed by the people of Orange County as part of a larger water portfolio – assertions that Orange County water officials accept as articles of faith.

“I feel like these folks are reopening old debates that have been solved years ago and it’s nothing to do with what’s on the table today,” Maloni told the board, responding to audience members, including this reporter, who challenged his assumptions. “They know that the project is needed…There’s no debate about whether the project is needed. And there’s no debate about how the MET subsidy works.”

In the second and final part of Dead in the Water on Wednesday: Is Poseidon’s proposed Huntington Beach desalination plant needed?

 

Posted in Environment, Headlines, MWD, MWDOC, Poseidon, Water BoardingComments (0)

Commentary: Why Desalination is Dead in California


By Conner Everts
Desal Response Group

Drinking water from the Sea?

Sounds like a great idea. JFK once said that it would be a greater achievement than putting a man on the moon, and most polls have shown a 70 percent acceptance rate of the idea.

So what is the problem?

The corollary to JFK’s statement would be “when economically and environmentally feasible” and therein is the challenge.  However, the first question that should be asked is do we need ocean water desalination (often called desal) in California and would it hurt or harm the environment compared to its alternatives?

In 2006 there were 29 proposals for ocean desal projects along the California coast, with many attached to old coastal power plants, now there are only nine.  While industry proponents blame California’s protective environmental regulations and a few environmentalists’ opposition, there were three main issues that stalled the proposals.

First, despite the State Desal Task Force convened by legislation, there is no consensus on a regulatory order or state-wide direction. So each proposal lumbered through the multi-agency process.

That’s as it should be because if there is a large scale desal plant built in California it will be the first on the Pacific coast and largest in the Western Hemisphere.  The first proponent out of the gate was Poseidon, a private corporation from Connecticut that failed with its first desal project – the largest in the nation at 25 million gallons a day – in  Tampa Bay, Florida, and then proposed two more plants, each with twice that capacity, one in Huntington Beach in Orange County and the other in Carlsbad in north San Diego county.

While working hard to gather political support for its southern California desal projects, Poseidon failed to respond to repeated information requests by the Coastal Commission or to follow its permitting guidelines. Meanwhile, local opposition grew and water agencies weighed into issues of the marine environment, which they little understood, and were forced to navigate California’s complex and arcane water supply laws as well.

Second, conceived in a time of drought, the most recent crop of desal proposals depended on a fear of limited water supply while demand was high for new development. This was especially true where desal plants were proposed on the coast, thus allowing entry points for previously undeveloped areas with limited water supply.

With the collapse of the global economy, developments now sit idle and the need for desal as a redundant water supply for more growth is being questioned.  Promoted as an offset to water pumped over the Tehachapis and therefore reducing greenhouse gas emissions, the opposite is true. The Metropolitan Water District of Southern California (MWD) states in its subsidy contract that the water produced by desal would not curtail deliveries of any imported water source.  Rather blood would be let on the floors of the MWD boardroom before anyone at MWD would give up any sacrosanct water rights.

Furthermore, the promises that these proposed desal plants would offset water taken from the SF Bay Delta turned out to be false. Given the long history of getting water back to fish and the environment, there is no regulatory process to make that happen. Just look at the 20 years of litigation that has taken place over Mono Lake.

Third: first things first. There are untapped and cost-effective local water resources that must be developed and that have environmental benefits, unlike desal, such as maximizing serious water conservation and water reclamation, capturing and treating urban and storm-water runoff, expanding now legal greywater and rainwater cistern systems, and fixing leaky infrastructure or pipes.

Combine that with a systems approach with watershed management and we begin to get to the point that Australia, Spain, and Israel did before they invested in desal – which meant reducing per capita water demand to 30-50 gallons per day. Compare that to 174 gallons for California as a whole and 121 gallons for Los Angeles.

Many areas across the state, including Los Angeles and Long Beach, have had serious reductions in water demand and eliminated the need for desal—it’s not in Los Angeles’ 20 year supply plan and Long Beach is reconsidering after careful research.

California spent $50 million of Prop. 50 water bond monies on researching this issue and while not all the grant results have been revealed the emerging consensus is that proponents’ promise of a technological breakthrough that makes desal feasible or necessary hasn’t been realized. This is a case of its not the technology, stupid, it is the lack economic considerations and available capital.

And then it rain, and rained, and continues to rain.  Reservoirs filled and spilled.  Snow pack reached record levels in the Rockies, from where a portion of our imported supply originates.  If we had only realized the potential to capture rainwater and redistribute stormwater back into our depleted underground aquifers, this would have been a great winter to replenish the bank of locally stored water.

A quick historical perspective shows that ocean water desal plans come and go in California.  In the 60s and 70s it was twin nuclear power plant islands to be built offshore and provide all the water we needed and a small plant that was sent from the navel base in Point Loma to Guantanamo in Cuba.

In the 80s and 90s it was the Santa Barbara plant that was built in the middle of the six-year drought and was idled before it ever was connected by El  Niño spring. While it is still being paid for it is more cost effective not to run it.

At Catalina Island in the late 80s a small plant was built as a back up to allow a developer to build condos.  It sat idle for many years until Southern California Edison took it over, and in the only place where they sell water it takes 70 percent of the island’s electricity to produce 20 percent of its water.

Internationally, where there is often no other choice, limits have been reached but with a price. Australia is now deeply indebted for billions for plants that sit idle and have been flooded.  Even the Middle East is having problems with desal with huge demands for energy and subsidized water in Saudi Arabia and discharge levels that increase salinity and therefore energy demands in enclosed areas.

Ocean desal is promoted heavily by a cabal of membrane manufacturers, including GE, power plants operators hoping to keep their old fish-killing machines operating, water agencies looking for large capital projects built with some else’s money, engineering consultants and even Las Vegas.

But the bloom is off the issue. It looks good on the outside but once you delve into the inside there are problems, like fast food might sound good at the moment of hunger but the results of eating it are negative.  Investing in the current crop of desal plants is like buying an old Hummer with today’s gas prices.

Concerned citizens who organized statewide and locally to inform the public and fight the desalination surge can now declare victory and focus back on appropriate multi-benefit local water resources.  It does not mean we won’t continue to monitor these projects but to focus on only the fight would validate an issue that, once again, has passed away. After ten years, this time, we should celebrate a successful fight that brought this to the light of day and the fact that California is not ready for ocean desal and it is not ready for us.

There are many other issues around desal including energy intensity, huge marine and fishery impacts and the alternatives, drinking water quality, sea-level rise with industrializing the coast and the true costs of water. Go to the website www.desalresponsegroup.org for more than you would want to know and links to the many references made in this article.

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Carlsbad Desal Buyout Likely – Min Taxpayer Cost: $640 Million


By David Rosenfeld
DC Bureau
Wednesday, 06 April 2011

When it comes to the future of desalinated water in California, San Diego County is facing a reality check. In agreements signed years ago, nine local water agencies brokered sweetheart deals with Poseidon Resources, an investor-owned Connecticut company that has been planning to build and operate a desalination plant in Carlsbad for the past 12 years.

The agreements guaranteed those nine agencies would not pay the true cost of desalinated ocean water – the most costly form of tap water on the planet – until the costs of imported water was even greater. And at that time, they would split the difference for up to 30 years once the plant was up and running.

But those contracts, as they appeared, were too good to be true. They were so good, in fact, for the water agencies that it made the project financially unfeasible, resulting in a near junk bond rating last year as Poseidon prepared to float $530 million in tax-exempt private activity bonds.

So the bond sales were put on hold and the contracts were renegotiated with Poseidon asking the San Diego County Water Authority for an additional subsidy and possibly to buy the nearly $700 million plant if there are future problems. (Poseidon had trouble with their desalination plant in Tampa Bay, Floridaand the Tampa Bay Water Authority had to take over that project.)

Rather than pass-through millions of dollars in subsidies, including up to $350 million from the regional wholesaler Metropolitan Water District of Southern California, the Water Authority is brokering its own deal with Poseidon to purchase the water directly.

“Those (local) agencies wanted to purchase the desalinated water at a price that was never more than buying water from the Water Authority, and that’s not possible. That was not financially viable,” said Ken Weinberg, director of water resources for the San Diego County Water Authority. “Discussions we’re having now is about paying the actual cost of production and distribution of that water.” 

The maximum price would be set at $1,600 per acre-foot in today’s dollars compared to around $800 for imported water currently. Exactly how much desalinated water the Water Authority will agree to buy from Poseidon – to then resell to local agencies – is still being negotiated in closed-door meetings. Poseidon spokesman Scott Maloni did not return repeated requests for comment.

Based on the average price of desalinated water around the globe at around $3,000 to $4,000, Poseidon may be still underestimating.

The new deal will certainly be more favorable to Poseidon’s equity investors – which change frequently and have included Warburg Pincus, Citi Sustainable and GE Capital.

The deal will undoubtedly be worse, however, for Southern California ratepayers, who increasingly find themselves at a disadvantage when it comes to what they will pay for life’s most essential resource.

“The Water Authority will have to raise its rates to cover additional costs of desalination,” said Glenn Pruim, utilities director for Carlsbad Regional Water District.  “It’s definitely in the best interest of the investors. This is a really good deal for Poseidon. It’s a good deal for the Water Authority because they are securing a regional source of water and it could be a good deal for Carlsbad. We just hope they are as good at negotiating deals as they are at making water.” 

Eight of the nine local water agencies that had deals with Poseidon – all but Carlsbad – have agreed to rip up their contracts and let the Water Authority proceed. Carlsbad is holding out for an agreement that guarantees a portion of the tax revenues the city would lose if the Water Authority ever exercised its right to buy the plant. Pruim said the two parties will likely reach an accord soon.

“Poseidon’s business plan doesn’t really make sense except that they get bought out by a public agency,” said Conner Everts, director of Desal Response Group, which would prefer more conservation measures before beginning desalination efforts. “We don’t really think they are there to honestly be a company producing water. We think they are there to buy permits and then get bought out.”

The Water Authority along with Poseidon and its investors are betting that the price of imported water will soon exceed the astronomical price of desalinated water. Various experts interviewed for this series believe it could be anywhere from 10 to 20 years. Yet Poseidon reportedly believes it could take less than five years.

“I don’t know how practical that is,” Pruim said. “Part of it is just reality. Poseidon isn’t manipulating the price of water. It is what it is. They are taking advantage of that in a way. The only thing that could go wrong is if Poseidon can’t produce it and they go bankrupt.”

An analysis by the Public Education Center’s DCBureau.org published last year showed that while private equity and bonds would be used for upfront construction, southern Californians would pay at least $640 million over 30 years for the project, including as much as $374 million in public subsidies. Those subsidies are largely still in place as Poseidon looks to forge a new agreement and finally break ground later this year to start producing water by 2015.

In Poseidon’s latest legal victory, California’s 4th District Court of Appeal rejected a claim by San Diego Coastkeeper to conduct additional environmental studies. 

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Conservationists Fight Back Against Seawater Desalination


By David Rosenfeld
Courtesy of DC Bureau
Thursday, 03 March 2011

California is in the process of building a series of massive ocean desalination plants on a scale not seen before in the United States. While most are at various stages, slowly slogging through bureaucratic red tape, conservationists are pushing back against powerful interests betting California’s looming water crisis occurs sooner rather than later.

Opponents argue the technology is too expensive and damaging to the environment while the state could do a lot more to conserve water at the tap and in the fields where most of California’s expensive imported water ends up. Skeptics also see in desalination a potential boondoggle where the public bears the risk and Wall Street investors reap the benefits.

“We should be doing a lot more in terms of water saving before we go into desalination,” said California Coastal Commission chairwoman Sara Wan.

“Most likely, given the population we have, we’re going to eventually need to do desalination for water,” Wan said. “There are ways to do it that are less damaging and ways that cause significant impact.”

There are now about 20 full-scale proposals for desalination plants – with several smaller facilities already up and running – from San Francisco to San Diego that would turn the salty waters of the Pacific into drinkable tap water. Some plan to draw brackish water through ground wells, while most want to draw millions of gallons of seawater each day through the same in-take pipes that power plants must phase out in 15 years.

Like the power plants, desalination plants have the potential to entrap sea lions, millions of fish and other marine life. The industry says it is reducing harm with newer technologies such as wedge-wire screens, but much depends on location. Wan voted against a large-scale plant in Carlsbad because it would destroy sea life in a nearby estuary, but she supported a plant in Monterey that plans to draw water through near-shore wells. Neither facility is built yet, though both could break ground this year, marking the first large-scale desalination plants in the state.

There are problems too with desalination’s byproduct, the heavy concentrates of salt and the remains of other chemicals that could be dumped into the ocean.

Desalination also has a massive carbon footprint. For the most common type of ocean desalination method called reverse osmosis, which pushes water through membranes, some 40 percent of the operating cost is electricity to power the plant.

The $700 million proposed plant in Carlsbad by investor-owned Poseidon Resources expects to satisfy around 8 percent of San Diego County’s water supply while at the same time consuming as much electricity as 45,000 homes. Greenhouse gas emissions would total about 200 million pounds a year, according to the project’s environmental impact assessment.

Advocates say the technology is becoming more efficient by re-capturing energy and using renewable resources as much as possible. But it is a lot to overcome.

Drawing water
Most of what the state knows about ocean water in-take pipes comes from the impact of 19 coastal power plants. In 2009, the State Water Resources Control Board ordered those plants to phase-out the use of surface water in-take pipes for cooling their red-hot equipment, the sole reason they are located on the coast in the first place. The state’s governing body on water determined those in-take pipes kill 9 million fish, 57 sea lions and other marine life each year.

Lou Correa and Scott Maloni

Sen. Lou Correa joins Poseidon CEO Scott Maloni to support desalination plant in Huntington Beach. Photo Arturo Tolenttino for SCV.

But those orders do not apply to desalination plants, which expect to use many of those same pipes, often at equal capacity, long after power plants are barred from doing so.

“The effects are the same if you’re drawing in seawater for desalination or power plants,” said Tom Luster, an analyst with the California Coastal Commission. “You’re killing essentially 100 percent of marine life, larva and fish eggs.”

Poseidon’s Carlsbad plant and another the company plans to build in Huntington Beach call for using the same surface water in-take pipes used by the local power plants there now.

“That just exacerbates the problem in our mind,” said Joe Geever, a spokesman for Surfrider Foundation, which along with other conservation groups has filed appeals and lawsuits against both facilities. “If you’re going to protect marine life, you have to protect it from all of these industrial in-takes.”

The Carlsbad plant would draw about 300 million gallons of seawater per day from a nearby lagoon and produce roughly 50 million gallons of drinkable tap water.

An environmental impact assessment performed by biologists determined the screens would destroy enough marine life equal to 66 acres of ocean productivity. To compensate for the impacts, Poseidon agreed to restore 66 acres of wetlands in the San Diego bay area and spend more than $60 million on carbon offsets.
 
Ironically, the state order against ocean-cooled power plants will diminish their capacity, industry experts predict, just as desalination is coming on the scene, which requires huge amounts of electricity.

The water sector already accounts for 20 percent of the state’s energy use, and desalination will only make it greater.

Despite the drawbacks, desalination has gained widespread support among California lawmakers and elected water officials who have pledged hundreds of millions of dollars in taxpayer subsidies.

Most of the projects would not be possible without tax-exempt bonds and direct subsidies beginning with California’s $3.4 billion Proposition 50 passed in 2002. It provided $50 million to support 48 desalination projects including research and development, pilot projects and feasibility studies from 2004 to 2006. The years following brought increased support as private companies stepped in to build some of the largest public infrastructure projects in the state’s history.

“Desalination is not the solution. But for some agencies it’s part of the solution,” said Paul Shoenberger, general manager of Mesa Consolidated Water in Costa Mesa.  Shoenberger also heads CalDesal, a newly formed pro-desal lobbying group made up of public water agencies and private water companies.

“With water being so critical these days, we shouldn’t be taking any options off the table, and I don’t think we should be pursing only one option,” he said.

According to backers, California faces a looming water crisis that could make the sky-high price of desalinated water today seem like a bargain in as little as 10 years. In fact, dozens of companies, many in the San Diego area, have millions of dollars riding on it.

“They are not just hoping,” said Glenn Pruim, utilities director for Carlsbad Regional Water District, about Poseidon. “They have it locked up in agreements.”

Two-thirds of Southern California tap water and most of the water irrigating California’s rich farmland arrives courtesy of an aqueduct system hundreds of miles long from the Colorado River to the east and the San Joaquin basin in the north. But those reserves are running low, and they threaten endangered species, which could potentially dramatically increase consumer water prices.

California’s population, meanwhile, could reach 60 million by 2050 from around 37 million in 2009, according to the state’s Department of Finance.

“You can ask anyone in the water industry,” said Noelle Collins, spokeswoman for the West Basin Municipal Water District, which supplies water to parts of Los Angeles County. “Everyone has said you can’t conserve your way out of this crisis.”

But analysts at the Pacific Institute, based in Oakland, say California farms and households could do a lot more to conserve water.

In parts of Southern California, up to 70 percent of all household water is used outdoors, mostly to water lawns, and an estimated 1.3 billion gallons of wastewater drains into the ocean each year.

In California, per capita water use still hovered around 176 gallons per day in 2005, according to the latest estimates by the State Water Resources Control Board.

By contrast, in Australia where ocean desalination plants are up and running in nearly every major city along the coast, consumers reduced their water use to about 40 gallons per day before turning to the costly alternative.

A 2003 report by the Pacific Institute found California could save up to 30 percent of its residential water measured in 2000 mostly by imposing national plumbing code standards established in 1992. Those standards call for low-flow toilets and showerheads and more efficient clothes washers – far less expensive steps than multi-million dollar desalination plants. Other options such as rain barrels, cisterns and native landscapes also help reduce demand. “These are by no means cutting edge technologies,” said Heather Cooley, a Pacific Institute policy analyst.

Another study in 2009 found that California farmers, who receive 70 percent of the state’s overall water supply, could save up to 16 percent – around 5 million acre-feet per year – by adjusting irrigation techniques.

“That’s water you wouldn’t have to withdraw in the first place,” said Cooley, adding that the changes would be greatest in dry months and would also result in healthier plants and less fertilizers and pesticides. “It does suggest that it’s a very effective mechanism for dealing with drought and, in the long run, helping us address climate change.”

In 2009, California passed a state water plan to conserve 20 percent by 2020. The law provides greater incentives for farmers to conserve water, but experts say it won’t be enough.

“There are certainly a lot of barriers to conservation and efficiency. One of them is the low price of water,” Cooley said.

Unlike consumer prices, agricultural water prices are less affected by shortages. Contracts are often set for years at a time and the costs are even more subsidized than residential systems. The new law will require water agencies to measure how much water farmers are using, but it will not enforce any conservation standards.

Sporadic reports in recent years of California farmers letting their fields lay fallow often has more to do with water being cut off due to drought rather than the price of water becoming too high.

Ocean desalination is one way to relieve water pressure on California agriculture, said Shoenberger, who heads CalDesal.

“With an increase in population and increase in water needs in California, desalination is a great potential alternative along with the others for getting local water that’s clean, safe and reliable,” Shoenberger said. “A lot of the inland and agriculture areas would love to see urban California reducing their reliance on the Delta and the inland streams.”

In many cases, conservation has relieved the pressure to build expensive desalination plants where experts realize they are not needed, but supporters say those efforts are running out of steam.

In greater Los Angeles County, water consumption has dropped 15 percent in the past year, according to the West Basin Municipal Water District. The district imports two-thirds of its water today, which it wants to cut in half by 2020. It  also manages a water recycling facility in El Segundo that turns wastewater into 30 million gallons of fresh water daily.

Much of that conservation and reuse came through programs sponsored by the Metropolitan Water District of Southern California, which manages the flow of imported water.

On January 26, Metropolitan reduced its conservation budget to just $10 million – about 1 percent of its total budget – for the coming fiscal year beginning in July. Last year, the southern California water agency spent about $20 million and the year before roughly $54 million in conservation rebates.

The agency, meanwhile, has pledged nearly bottomless funding to water districts with working desalination plants. A report by the Public Education Center’s DCBureau.org published last year analyzed how these incentive funds amounted to taxpayer subsidies.

Metropolitan has already committed up to $350 million over 25 years to Carlsbad – given the plant produces as planned – and a virtual blank check for additional plants to come. The incentive amounts to $250 per acre-foot of fresh water produced.

“We spent hundreds of millions of dollars on conservation and recycling projects,” said Bob Muir, Metropolitan spokesman. “We conserve and recycle and cleanup groundwater that produces more than a million acre-feet of water per year. That’s more than the water used by cities of Los Angeles, San Diego and the San Francisco Bay area.”

West Basin water officials, like many others along the coast, are looking to spend hundreds of millions of dollars on a desalination plant to supplement around 10 percent of the region’s water needs. The district has already spent more than $21 million on two pilot projects over the past 10 years.

At a demonstration plant in Redondo Beach opened in October, visitors can see an underwater video of fish swimming past the in-take pipes and educational displays about making desalination more feasible. Yet, according to West Basin, plans for a full-scale plant are still undecided. Collins said the district wants a plant capable of producing 20 million gallons per day, but a location has not been chosen.

“We want to double our recycling and conservation and add a little bit of ocean desal,” said Collins, adding the district would own the plant while contracting major functions.  

Desalination is not new in California. Any water reuse facility or groundwater remediation likely uses the same technology. And even large-scale plants were considered periodically in decades past.

Several efforts failed to materialize. Others were built but rarely needed. In 1998, Santa Barbara built a desalination plant, which now sits idle because it is too expensive. Recent desalination proposals, too, have been temporary shelved as conservation measures are paying off.

Proposed plants in Santa Cruz and San Luis Obispo are being questioned. In Long Beach, where local officials have been considering a desalination plant, conservation steps have brought per capita water consumption down to about 100 gallons per day.

“It’s not making as much sense to them now,” said Conner Everts, director of the Desal Response Group opposed to desalination. “There’s no sense of priorities. They just don’t make sense to run. I’ve been working on water issues for 30 years. I’ve watched our per capita use slowly drop. And we know we aren’t capturing and re-using as much as we should.”

The price of desalinated water varies depending largely on the cost of energy. It can average double or even quadruple the current price counties and cities pay for imported water in California. As desalination gets more efficient and the price of water keeps rising, supporters say those price lines will eventually cross. Wherever they cross, the price will be high.

On the Monterey peninsula where a $400 million desalination plant recently won final approval, residents there could be the first to feel the effects financially. The Public Utilities Commission has approved a plan to allow publicly traded California American Water to potentially quadruple water bills on 40,000 ratepayers in order to pay for the proposed plant. There is disagreement, however, over the exact effect on rates with the PUC arguing much less.
 
California American supplies around 40,000 ratepayers with tap water. Most of that water comes from the Carmel River.

“We’re pretty close to the bone on water conservation,” said Andy Bell of the Monterey Peninsula Water Management District, which issues water permits on the Carmel River. Indeed, the region has some of the lowest water use per capita in the state at around 70 gallons per day.

Beginning in 1995, the State Water Resources Control Board ordered the reduction in the amount of water it withdrew from the Carmel River by 70 percent by 2016 because of endangered steelhead. A ballot measure to build a damn was defeated later that year. Since then, efforts have turned to conservation and desalination.

When the desalination plant is completed, likely in several years, the Marina Coast Water District will own the plant while Cal-Am will purchase the water and pass the costs onto ratepayers. The Public Utilities Commission says consumers could pay up to 63 percent more for water, but a division within the PUC charged with representing ratepayers estimates the agreement could lock consumers into paying four times their current amount. The plant should produce around 10 million gallons of drinkable water per day when it is up and running.

Diana Brooks, with the Division of Ratepayer Advocates, said the division opposed the water purchase agreement approved by the PUC last year because it lacked meaningful cost controls.

“In this case you have a private water company contracting with two public agencies to deliver water and they have no ability to absorb any risk,” Brooks said. “If there are any risks or the project doesn’t work right, all the risk passes right back through to the customers.”

The PUC also granted Cal-Am the ability to pass through in its rates the costs of attorney fees up to $4.3 million, including the costs of fighting appeals by the Division of Ratepayer Advocates.

“So we’re representing the customers but the customers had to pay for the company’s attorney costs,” Brooks said.

Catherine Bowie with Cal-Am disagreed with Brooks’ assessment. “There is multiple cost controls in the water purchase agreement,” she said. “The facility is being developed by public agencies, so there will be every effort to go after the lowest costs. We have a number of provisions that deal with the management of the project. There is an independent analysis of financing and value engineering through design and construction. I absolutely think there are guarantees of cost control.”

Bowie said that after six years (an application with the PUC was originally filed in 2004) the area was ready to finalize its plans. “We have been in need of a new water supply here since the 1970s, and we are finally developing a solution to this problem,” Bowie said. 

Photo top right: Arturo Tolenttino, Surf City Voice

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Less Water Means More Money for Desalination Industry


By David Rosenfeld
DC Bureau
Tuesday, 08 March 2011 

For the scores of businesses in Southern California already supplying desalination equipment around the globe, California’s impending water crisis spells opportunity.

An estimated 3,000 people work for companies in the San Diego area supplying equipment or logistical support for desalination plants, earning the industry upwards of $350 million in annual revenues.

A key element of their business also supplies facilities that re-use and recycle water using similar technology including the membranes that make up the heart of any ocean desalination plant.

“It’s a big industry,” said Tom Pankratz, who writes about desalination for Global Water Report and consults for various water agencies. “A lot of companies that make stuff for desalination plants also make stuff for power plants and automobile plants. There are a lot of major multi-national corporations that have desalination subsidiaries.”

Some of the biggest companies include General Electric, Dow Chemical, Acciona Aqua, Toray Membrane, Veolia Water Solutions and Hydronautics.

About 20 ocean desalination plants up and down the cost of California – most in the early planning stages – have stirred debate over whether adopting such an expensive technology with large environmental impacts is worth it.

Most of the world’s 2,000 desalination plants are currently located in the Middle East where water is in short supply but energy is cheap. In California, an estimated 40 percent of the cost of desalination is energy to run the plant.

Lobbying by companies that stand to gain financially from desalination has helped earn widespread support from California lawmakers, including strong backing from former Gov. Arnold Schwarzenegger.

In 2007, Schwarzenegger aligned with a group of nearly two-dozen lawmakers – local and statewide – supporting a proposed plant in Carlsbad by investor-owned Poseidon Resources. In a signed letter they urged the California Coastal Commission to approve the Poseidon project “on its first opportunity.”

In November of that year, the commission voted 9-to-3 in favor of the project even though Commission staff said Poseidon failed to provide complete information. 

Since 2000, Poseidon has spent nearly $1 million lobbying the California legislature and other elected officials that oversee the state’s intricate water supply. All told, Poseidon has reportedly spent around $60 million on engineering and attorney fees on its Carlsbad plant before a single spade of dirt has been overturned.

“Poseidon is very well connected,” said Glenn Pruim, Carlsbad public works director. “That’s one thing they’ve done very well is to make contacts in the industry whether it be politically or legally. They’ve been very successful in fighting off lawsuits against their project.”

In 2008, executive director of the California Energy Commission, Melissa Jones, abruptly changed positions on the Carlsbad project. First she wrote to the Coastal Commission that the project contained “several fundamental errors.” Eleven days later, Jones wrote to retract her comments. She said she had met with Poseidon representatives and concluded “the project and the plan for mitigation are laudable.”

Proposed desalination plants must also win approval from city and county governments as well as the Public Utilities Commission in the case of investor-owned utilities. First and foremost, however, desalination must win the nod from water agency officials, which, in large part, they have succeeded in doing.

A group of California water companies and public agencies formed the non-profit CalDesal last year to educate and lobby for desalination. So far the group has collected around $100,000 in membership dues, said Paul Shoenberger, general manager of Mesa Consolidated Water District in Costa Mesa. The group recently hired as executive director Ron Davis, former legislative director of the Association of California Water Agencies.

“Our main purpose is to promote environmentally friendly desalination in California,” Shoenberger said.

The desalination message also reaches water officials through sponsored conferences, such as the annual ACWA meeting. Public records indicate today’s West Basin board members attend annual conferences of the New Water Supply Coalition, which lobbies nationally for desalination, and the American Membrane Technology Association, representing companies integral to desalination plants.

The International Desalination Association plans to hold conferences this year in Dubai, Algiers, China and Antigua. Global Water Intelligence also convenes seminars around the world. At last year’s conference in Paris, event organizers tried to pay the airfare for a San Diego County Water Authority official to accept an award for public utility of the year.

“The legal departments said they couldn’t do it and don’t have a budget to pay themselves,” said Pankratz, who helped organize the conference.

But officials frequently travel overseas to see existing plants. Last year, Pankratz helped West Basin water officials travel to Australia – paid by the district – to see an ocean desalination plant in action.

“If you want to see a desalination plant that’s operating, you have to travel,” Pankratz said. “Whenever anyone is doing a new plant, the most senior engineers usually take a trip to visit some operating plant to see how it’s working.”

City councilmen sometimes go on trips, too, he said. “Most of the time the city pays for it.”

Adding to the obscure nature of California’s intricate network of water rights, water agency board meetings often operate with little oversight, said Conner Everts, director of the Desal Response Group. In 2004, two members of the West Basin Municipal Water District went to prison for accepting bribes.

Everts said the current board and the larger Metropolitan Water District of Southern California could do more to increase transparency. Projects are often approved, he said, “with little or no public scrutiny with subcommittee policy meetings and board meetings in the middle of the working day.”

The results of lobbying at the Public Utilities Commission and the California Coastal Commission are obvious. In August 2009, the Utilities Commission overruled an administrative law judge in a dispute over what California American Water could charge ratepayers for desalinated water.

A day before the ruling, company lawyers met with commission staff.

“It was a compromise,” said Diana Brooks with the Division of Ratepayer Advocates. “But on the last day before they voted on it, the commissioner changed his version of it, and adopted the settlement the way it was written.”

The settlement gave California American Water, a publicly traded company, authority to potentially quadruple water prices for desalinated water produced by a publicly owned plant.

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Poseidon Desal Deal? Govt. May Rescue Junk Bond Project


By John Earl
Surf City Voice

Due to soaring cost estimates and lack of private financing for a proposed 50-million-gallon per day Carlsbad desalination project, a government water agency may negotiate a takeover deal with the project’s developer, Poseidon Resources, Inc.

Poseidon Resources is a budding multi-national water baron that also has an identical desalination plant in the dock for Huntington Beach, next to and functionally linked with the AES power plant, on Pacific Coast Highway and Newland Avenue.

What happens in Carlsbad will indicate what could be in store for the Huntington Beach project and residents of our city as well.

The $650 million Carlsbad project would have supplied 56,000 acre feet of drinking water per year to nine of 24 San Diego County water districts under the umbrella of the San Diego County Water Authority (CWA).

But the cost of water derived from the desalination plant will be much higher than previously stated and it would take $630 million in combined public subsidy funds paid in yearly installments over 25-30 years to make the “private” project financially viable, according to a memo written by Oceanside city manager, Peter A. Weiss.

Oceanside is one of the nine water districts, known collectively as The Desal Partners, which had signed water purchasing agreements with Poseidon.

Due to Poseidon’s financing troubles and needed word changes, however, those agreements had to be revised before the project could proceed. But only one member, the city of Carlsbad, has signed a revised contract so far.

“In the past few months it has become apparent that Poseidon’s cost of water is going to be greater than originally proposed,” the memo states. “To make the project viable, Poseidon needs subsidies from the San Diego County Water Authority and Metropolitan Water District (MWD)”, the memo continues.

The CWD is a member of the MWD, which supplies water to 26 southern California water agencies. Read the full story

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Bill Borden Responds on Poseidon ‘Myths’


Dear John,

Thank you for your question in regard to a recent column.

You are asking me to prove that there  are no public funds being used for the Poseidon project. You are a pretty smart guy and must know that it is philosophically impossible to prove a negative. If you are making the claim that public funds are being used, then it is you who should do the proving.

I will advise that no municipal bonds are being used and that the project is not being subsidised. If you are able to prove that public funds are being used, your other readers and I would be very interested in the details.

One area frequently misconstrued as public funding is the subsity given as an incentive to MWD, not Poseidon.

Further, Poseidon in Carlsbad issued tax free bonds, but as you know these are not public funds.

You indicate that you will have other questions regarding this column. While I always respond to reader questions, I have no thirst for an ongoing dialogue on this column or any other column. I write 52 a year and can’t keep dwelling on one over another.

Thank you again for reading my column and taking the time to write.

Sincerely.

Bill Borden

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Posted in Environment, PoseidonComments (4)

Poseidon Adventure: How your tax dollars fund water privatization


Poseidon, god of the sea.

Poseidon, god of the sea.

Poseidon Resources Inc., a multinational water entrepreneur, wants to build desalination plants in the cities of Huntington Beach and Carlsbad in California. Desalination is the most energy intensive and costly source of drinking water and Poseidon always said that their projects would be funded completely with private sector dollars. Local elected officials bought into that, but it was obvious from the start that these two projects would need public funding to exist. In fact, if these projects go through, they will each receive a minimum of $350 in government subsidies, and possibly much more. Here is the story.

Editor’s note: Unfortunately, due to a technical problem, the aspect ratio of the video is incorrect and images appear taller than they should. The Surf City Voice apologizes for the inconvenience. Efforts are underway to correct the problem.

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