To the five elected directors of the Mesa Water District, conservation is a Trojan horse, unleashing Cuban-style authoritarianism, drop by drop.
The answer to the worst California drought in 500 years, they say, is to sell more water and build more ocean desalination plants.
“The solution to drought is water,” opined Director Fred Bockmiller during a recent (Nov. 10) Mesa workshop. Conservation doesn’t solve the lack of water, he reasoned, “It just means you don’t use it.”
In 2014, after three years of severe drought and foot-dragging by the state’s 400 water agencies, Governor Jerry Brown mandated state-wide conservation standards designed to achieve a 25 percent reduction in overall water use.
Centuries ago, explorers sailed Poseidon’s Seven Seas looking for beautiful mermaids and lands full of golden treasures.
Although some of the hapless adventurers may have found what they were looking for, those who didn’t drink too much seawater were usually disappointed.
Today, it looks like Poseidon, the God of the Sea, is up to his old tricks again.
This time, taking corporate form (same as being human under American law), he’s promising to build a new source of water–an ocean desalination plant in Huntington Beach–that will create an additional and reliable supply of water for the Orange County Water District’s ratepayers.
At least that’s what most people think he is promising.
But is he?
Any proposed deal between the OCWD and Poseidon Resources Inc. to build an ocean desalination plant will depend upon a subsidy of $400 million, doled out to Poseidon for a 15-year-period, courtesy of water ratepayers throughout Southern California.
The OCWD manages the Santa Ana River Groundwater Basin, which supplies over 70 percent of the drinking water for Central and North Orange County.
A public forum held by Garden Grove mayor Bao Nguyen last night at the city’s community center examined the cost of and alternatives to a proposed $1 billion ocean desalination plant promoted by the Orange County Water District.
Those issues–and the panel of local experts who discussed them last night–have been all but ignored by most of the OCWD Board of Directors, some of whom have strong financial and political ties to Poseidon Resources Inc., the company that would build the plant, and its big-business allies.
The OCWD maintains the county’s groundwater basin, which holds 66 million acre-feet of water and provides about 70 percent of the water used in central and northern Orange County, serving 2.3 million people.
For the past 18 months a clique of four board members, Cathy Green, Shawn Dewane, Stephen Sheldon, and Denis Bilodeau, joined last January by Garden Grove Councilmember Dina Nguyen, have steered the District straight toward a long-term contract with Poseidon.
OCWD staff presented a proposed term sheet (pre-contract) to the board on May 14.
The board approved the term-sheet 7 -3. Nugyen voted for it.
Nguyen, who was the beneficiary of $11,000 in “independent expenditures” by a Poseidon related PAC in her recent election to the OCWD board, was invited to participate in the forum but was a no-show.
Staff is now negotiating a contract with Poseidon that would lock the district into buying 56,000 acre-feet of desalinated ocean water per year, regardless of need, for the next half-century.
Poseidon’s water would cost about $2,000 an acre-foot out the door, more than 3 times what OCWD currently pays for the untreated water it imports from the Metropolitan Water District of Southern California (MET) to help maintain the county’s groundwater basin supply.
Poseidon and its allies on the OCWD board claim that its more expensive water would be a “reliability premium” akin to car insurance that would add to the county’s water supply portfolio and guarantee water during a drought.
But, in order to be financially viable, Poseidon is demanding hundreds of millions of dollars in ratepayer-backed subsidies for the first 15 years of the contract. In return, MET rules require that Poseidon’s 56,000 acre-feet of desalinated water replace an equal amount of (cheaper) imported water, which would then be made available to water agencies outside of OCWD’s service area.
There would be no net gain in water supply for the district, which would be paying three times as much for Poseidon’s replacement water while subsidizing the cheaper imported water for other agencies. And the county wouldn’t receive more water during a drought.
This reporter has repeatedly asked Poseidon officials and OCWD directors to explain the benefit to ratepayers of paying three times as much for water than necessary and subsidizing cheaper water for ratepayers outside of Orange County, but to so far mum’s the word.
For the first 15 years, the proposed pricing scheme would pay Poseidon a surcharge of up to 20 percent on imported MET water (at the higher MWD treated rate) on top of a 3 percent annual compounded surcharge that recurs for the life of the contract, underlying subsequently declining variable surcharge rates.
A Surf City Voice review of the proposed pricing scheme shows that after 15 years ratepayers would pay up to $2,700 per acre-foot for Poseidon’s water (assuming the required $56,000 af) versus about $1,048 per acre-foot for untreated MET water, which comes out to about $1.8 billion versus about $700 million in total for that period.
That’s about $1.1 billion dollars that could be used for the cheaper and more efficient water supply alternatives ignored by OCWD and Poseidon but examined by the forum panel of experts.
Panel members are former Huntington Beach mayor Debbie Cook, Irvine Ranch Water District’s Peer Swan, Coastkeeper’s Ray Hiemstra, and Garden Grove water officials. Members of the public, including Westminster City Councilmember Diana Carey, also spoke.
On March 11, the San Diego Union-Tribune posted an op-ed, “Desalination makes sense for Orange County”, written by Assemblywoman Pat Bates (Laguna Niguel). It is unclear why she was addressing the California Coastal Commission since the project was not on its March agenda.
The paper chose not to allow comments on her article. So here is my response to her piece which reads as if lifted from a Poseidon Resources press release.
She goaded me from her first sentence: “Anyone who has stepped outside in the past year has undoubtedly seen the effects of our state’s historic drought conditions.”
Perhaps Ms. Bates should take a look around her own district before she goes off with her dire news of “empty reservoirs, dry wells, and brown, arid landscapes across California.”
Orange County is the poster child of disregard for the drought: lush green expanses of grass in front of strip malls, road medians, HOAs, government facilities, and private properties. Any claim she makes that Orange County has “tried” to do its part is laughable.
It is interesting that Ms. Bates would chime in on a project outside her district that runs roughly from Dana Point to Cardiff by the Sea in San Diego County. Her district imports nearly 100 percent of its water. North Orange County imports only 30 percent and it could be zero if we managed the groundwater basin equitably.
“Trying” isn’t good enough, especially when it places the burden of costly boutique desalinated water on those who are actually “doing” something.
Residents of Santa Ana and Westminster are close to an ideal goal of consumption of 100 gallons per person per day. At the other extreme are communities like Villa Park and Northern San Diego County, where 500 gallons per person per day is the norm.
Why is 100 gallons per person per day ideal? Because at that level, North Orange County could get nearly 100 percent of its water from the groundwater basin.
The manner of water allocation used by the Orange County Water District and its member agencies places a disproportionately higher cost burden on those who consume the least amount of water. In effect, those who aren’t just “trying” but are implementing conservation will be subsidizing the explosive costs of ocean desalinated water.
And if North Orange County goes all in for an ocean desalination project, will Ms. Bates be sponsoring a bill to enable the OCWD rate payer to subsidize water sales to South Orange County water agencies?
Ms. Bates then goes on to cheer lead for desalination: “Southern California communities have rallied behind desalinated ocean water as a reliable, safe and environmentally friendly solution to long-term water shortages.”
It is interesting to note that a small consortium of communities in her own district have spent millions of dollars building and evaluating a pilot project in Dana Point only to discover they couldn’t “rally” enough support for such an expensive endeavor.
Ms. Bates reports on the “nearly completed” project in Carlsbad. But we are still waiting to see how the San Diego County Water Authority allocates the costs of this project, a painful task they have been discussing and postponing since 2012. The devil is in the details, details that were not sorted out prior to signing a “take or pay” contract.
Ms. Bates calls desalination “out of the box” thinking but in reality it is a knee jerk reaction by politicians who have ignored California’s failed water policies, archaic water laws, and fractured governance.
Addressing long term water needs requires long term thinking which will never be the domain of politicians in Sacramento.
It is much easier for elected officials to apply a “technical” fix knowing they will be out of office before the bill arrives.
What we need are courageous politicians who dare to engage with citizens in understanding and exploring solutions that actually address water needs and not water wants.
North Orange County does not need an ocean desalination project and hasn’t even figured out what they would do with the water. If Ms. Bates thinks one is needed in South Orange County, then she should address her own district’s needs first.
Some of Orange County’s water managers and politicians insist that a proposed partnership between Poseidon Resources Inc. and the Orange County Water District to build a $1 billion ocean desalination plant in Huntington Beach is a good deal at even three or more times the $600 an-acre-foot price currently paid by OCWD for imported water.
That’s a great price to pay for a reliable source of water during shortages caused by drought, earthquakes, and population growth, they say, because it would protect our economy and general welfare.
Conservation, rainwater retention, and expanded wastewater recycling are suggested as cheaper alternatives to ocean desalination.
Those proposed changes are much more cost effective than desalination and would help to maintain a reliable marine life population along the California coast.
Now a new idea has come forth from one of the County’s most experienced water managers, Peer Swan, who serves on the Irvine Ranch Water District Board of Directors.
Speaking to over 200 Orange County residents at a town-hall meeting in Huntington Beach on March 4, Swan explained how a commonsense change in the way we manage our groundwater basin and water imports could provide all the reliability we need, avoiding nearly $1 billion in desalination costs every 10 years.
On average, north Orange County gets about 70 percent of its water by pumping it from the groundwater basin. The 30 percent difference is made up with water purchases that member agencies make from the Metropolitan Water District of Southern California (MWD).
OCWD manages the basin to prevent excessive overdraft, but not necessarily to maximize its potential capacity.
There are three major sources of water used to recharge the basin: 1) rainfall/Santa Ana river flows; 2) the Ground Water Replenishment System (turning waste water into drinking water); and, 3) imported water from MWD.
Swan’s solution for water reliability is simple.
Historically, severe drought has caused MWD to reduce water allocations in one out of 15 years. To be conservative, Swan assumed water rationing in two out of ten years.
If OCWD and its member agencies withdrew less water from the basin during the eight years that have rain while maximizing their use of imported water, the basin would be full for dry periods, acting as our water reliability “insurance” policy during years of water rationing.
The groundwater basin, our water bank, eliminates any need to create additional “reliability” supplies at enormous cost.
Before shifting an exorbitant $1 billion insurance policy to the ratepayers, water managers should thoroughly analyze all of the commonsense alternatives.
But the OCWD’s board of directors has been loath to use commonsense over the past year, rushing toward a draft contract with Poseidon, while limiting transparency and public discussion of important issues left unanswered.
Ratepayers want reduced water bills. Conservationists want reduced environmental impacts. These two constituencies are not necessarily mutually exclusive, but Swan’s commonsense approach would answer both of their concerns.
It is simply not good enough for our elected representatives on water boards to respond with the hollow claim that, “Even if we did all the alternatives first, we still need the water Poseidon is offering.”
Without numbers and analysis attached to that unsupported claim, we shouldn’t give Poseidon our trust, or our money.
Poseidon is pushing OWCD hard to sign a “take or pay” contract—the ratepayers must buy its boutique water even in the 14 years that it isn’t needed (assuming it ever would be).
But as ratepayers in Australia recently learned, racing to build desalination facilities before exhausting better alternatives has turned out to be short sighted and costly for ratepayers who were forced to take water they didn’t need after all.
If OCWD signs Poseidon’s proposed “take or pay” contract before implementing preferable alternatives, Australia’s costly lesson on water mismanagement will have been lost at the expense of Orange County’s ratepayers.
The complaint alleges that Sheldon appears to be using his business relationship with consultant Roger Faubel, owner of Faubel Public Affairs, to shield his financial links to Poseidon Resources, the company that wants to build a $1 billion ocean desalination plant in Huntington Beach.
The OCWD manages the groundwater in the Santa Ana River basin used by 19 cities and water agencies, referred to as producers, in central and north Orange County.
If the plant is built, Poseidon wants to sell the OCWD 56,000 acre feet of desalinated drinking water yearly for 30 years as a replacement for imported water the District currently buys from the Municipal Water District of Orange County at about a third of the cost of Poseidon’s water.
The OCWD is currently considering various options for doing business with Poseidon, including full financing of the desalination plant.
Sheldon’s potential legal problem is that public officials are prohibited by California’s Political Reform Act from influencing legislation or policy decisions that affect their own financial interests or the financial interests of employers they worked for in the preceding year.
It’s election time. So, in September, Poseidon Resources released another push poll that shows widespread public support for a $1 billion ocean desalination plant that it hopes to build in southeast Huntington Beach.
The poll, commissioned by Poseidon and conducted by Probolsky Research, is based on telephone interviews with 325 “likely voters, whatever that means, residing within the boundaries of the Orange County Water District (OCWD), which is leaning heavily toward buying all of Poseidon’s water or financing the project, which would transfer all of the risks to OCWD’s ratepayers.
The OCWD, which manages the Santa Ana River groundwater basin, provides about 65 percent of the drinking water for 19 municipal water agencies in central and northern Orange County.
But only one of MWDOC’s members has signed an intent to buy any of Poseidon’s water. In theory, MWDOC could force its other members to participate under its “core” program, but that kind of bullying resulted in a revolt by its south county members once before, so force is an unlikely option.
The OCWD, on the other hand, can simply pass the costs of Poseidon’s desalinated water onto the producers, who pump its groundwater for a fee.
Commentary by Debbie Cook
Special to the Surf City Voice
Ocean desalination in Huntington Beach makes sense…if you don’t really think about it. But thinking about it requires understanding all the consequences of Poseidon Resources’ proposed project.
Take for example the unnamed city staffer who probably thought he was brokering a good deal for residents when he negotiated 3000 acre feet/year of Poseidon’s water for 5 percent below the Metropolitan Water District of Southern California imported rate–a savings of $150,000. The problem is that if Orange County Water District (OCWD) approves partnering with Poseidon, the Replenishment Rate (RA) for all of the water we pump from the aquifer will rise by at least $103/acre foot according to their estimates. Huntington Beach pumps on average 20,000 acre feet per year. That means that rate payers will pay an additional $2 million per year for water to save $150,000.
Thinking about it seems to be the last thing that Poseidon and the water agencies want us to do. OCWD recently reneged on their promise to convene a citizen’s committee. Their Board of Directors along with the redundant Municipal Water District of Orange County (MWDOC) meets in almost anonymity, their agendas often obscuring the real nature of discussions, thus thwarting public participation. They certainly don’t want people really thinking about it.
Huntington Beach’s Mayor Matt Harper similarly impedes anyone, including other elected officials, from thinking through ocean desalination. Within a two week period recently, Harper placed items on the agenda of the obscure West Orange County Water Board (WOCWB) and the City’s Intergovernmental Relations Committee aimed at hastening agreements that were not understood by members or staff.
At the WOCWB, he invited Poseidon’s pipeline consultant (former Huntington Beach City employee Howard Johnson) to present a pipeline lease arrangement sought by Poseidon. Information was not available prior to the meeting. The item was placed on the meeting agenda as an information item rather than an action item. California’s open meeting laws preclude action on information items, but this did not stop Harper. He attempted to garner the votes to move forward on the hiring of consultants and the writing of pipeline lease agreements. Even staff was caught off guard and not prepared to give their own presentation or answer questions. Fortunately the representatives of Westminster, Seal Beach, and Garden Grove were uncomfortable with acting so hastily and the motion failed.
Undaunted by this setback, Harper moved on to the city’s Intergovernmental Relations Committee. He invited a representative from MWDOC to present an item that their board has been pursuing for several years, to re-categorize desalinated water as a “core” service rather than a “choice” service. Few residents are familiar with this issue and even fewer are likely to have given it much thought. If MWDOC is able to move desalination from a choice service to a core service, then Huntington Beach and other North Orange County cities will be forced to subsidize south Orange County water agencies and their plans to build a desalination project to serve south Orange County. That makes about as much sense as Orange County subsidizing San Diego County’s desalination project.
The problem with those of us who have spent time thinking about the devil in Poseidon’s details, is that it turns you into a cynic seeking a semblance of rationality in the situation.
I can come up with only one rational reason for such blatant disregard for the public’s interest and the facts–money. Money turns many self proclaimed fiscal conservatives into corporate welfare campaigners.
A glance at Matt Harper’s recent campaign donors tells the story:
Poseidon Resources, $2,540; Simon Wong Engineering, $249; Geosyntec Consultants, $250; Arcadis, $250; AKM Consulting Engineers, $250; Psomas, $540; Parsons, $250; Nossaman, $189—a total of $4,518 from donors directly or indirectly involved in promoting the ocean desalination business.
Poseidon and their brethren have spent millions to keep you and your elected officials from making sense of their uneconomic and imprudent project. In effect, there will be no thinking allowed on their watch.
Debbie Cook is a former mayor of Huntington Beach and is an advocate for greater transparency in public water management.
Editor’s Note: Opponents of an ocean desalination plant (Nowaterdeal) proposed for Huntington Beach, California, recently launched a major campaign to block the project (here). Poseidon Resources created a response to some of those claims and is circulating it publicly. The Voice republishes it below. NoWaterDeal’s counter rebuttal can be read here. On Monday, May 6, the Huntington Beach City Council will consider a proposal (here) by Mayor Connie Boardman to recommended to the California Coastal Coastal Commission to deny the Coastal Development Permit for the project when it considers the project this summer.
Huntington Beach Desalination Project
Fact vs. Fiction
Opponents of seawater desalination are distributing a campaign mailer with misleading and factually incorrect claims about the Huntington Beach Desalination Project and the cost of desalinated water. This fact sheet corrects these erroneous claims.
Claim: “$5 billion dollars will be added to local water bills … These bills could total $8,500 for the average retail water customers over the next 30 years.”
Fact: This claim is factually incorrect. The cost of water from the desalination project is not additive, as the claim assumes. Drinking water produced by the desalination project will replace an equivalent amount of imported water into Orange County and thus eliminate the related imported water costs to the consumer. The claim above fails to take this fact into account. If the avoided imported water costs were taken into account, the $5 billion claim would be reduced by billions, potentially even more than $5 billion, in which case buying the desalinated water would result in savings to the ratepayers of Orange County. If the historical rate of imported water escalation is assumed for the next 30 years, purchasing the desalinated water would indeed result in significant savings1. Additionally, the $5 billion cost claim factors in an arbitrary escalation of desalination water at 3.5% annually and fails to account for available local water supply development financial incentives that will reduce the cost of desalinated water by up to $250 per acre foot or $14 million a year2.
1 6.4% = MWD’s Full Service, Treated Tier 1 Rate’s historical average annual rate of increase during 37 year period from 1978
2 $14 million = $250 per acre foot financial incentive x 56,000 acre feet per year produced by the desalination plant.
3 City of Huntington Beach Entitlement and Plan Amendment 10-001, approved September 2010
4 20 year period from 1993-2012 for CPI-U series identification numbers CUURA421SA0 & CUUSA421SA0 (All Items, Los Angeles-Riverside-Orange County, CA)
5 Average Retail Electric Utility Prices, Industrial, as published by the CA Energy Commission
This claim is also factually incorrect as it pertains to ratepayers living in the City of Huntington Beach. As a condition to the permits3 issued by the City of Huntington Beach to Poseidon’s desalination project, the City, at its option, can receive up to 3,360 acre feet per year of desalinated water at the lower of a 5% discounted price off the rate the City pays the Municipal Water District of Orange County for imported water and the cost of the desalinated water. This means that when the desalination project comes online Huntington Beach residents will be paying less for imported water than they would without the project. This requirement will save the City’s ratepayers tens of millions of dollars over the 30 year term of the project.
Ultimately, the cost impact of integrating desalinated water will differ from city to city based on each city’s water supply mix and rate structure as well as the future escalation of imported water rates. However, the Huntington Beach Desalination Project will provide Orange County with a substantial supply of locally-controlled, drought-proof water. These are attractive characteristics that imported water simply cannot offer, given the current and future water demands, environmental concerns, pumping restrictions and threats on the State Water Project and Colorado River Basin.
Claim: The mailer applies an arbitrary inflation figure of 3.5% per year to the cost of desalinated water.
Fact: Poseidon expects the cost of desalinated water to escalate at 2.5% per year. Approximately half of the cost of desalinated water will cover capital costs and escalate at a fixed 2.5% per year. The remaining balance of the cost covers the operating and electricity costs of the Project. The portion of the desalinated water price that covers operating costs will escalate with the Consumer Price Index (CPI-U) for Orange County, which has averaged 2.4% per year over the last 20 years4. The portion that covers electricity costs will escalate with the applicable SoCal Edison industrial tariff rate, which has averaged 2.2% for the 20 year span from 1991-20105.
Claim: “No public subsidies for private profit”
Fact: Poseidon did not request and is not receiving “public subsidies” as part of the successful financing of its Carlsbad Desalination Project, and the company is not seeking public subsidies for its Huntington Beach Desalination Project. Public water agencies in Orange County that buy desalinated water are eligible for an up-to-$250 per acre foot financial incentive from MWD under its Seawater Desalination Program (SDP). This same financial incentive under MWD’s Local Resource Program (LRP) has been used to financially support the OCWD’s Groundwater Replenishment System (GWR). The LRP is designed to foster the development of local water supplies that initially cost more than imported water supplies, and as such they reduce, not increase, water costs for Orange County consumers. Poseidon is neither a public agency nor an MWD member and is not eligible for the funds. MWD funding is subject to strict accounting and auditing measures, and the incentive funds are only available to the purchasers of water to offset predetermined costs.
Claim: “It’s just too risky … In Australia four of six desalination plants built since 2006 sit idle in stand-by mode.”
Fact: This reference to Australian and its desalination plants is misleading and not analogous to the Huntington Beach project. The regions in Australia where these plants are built experience up to four times the annual precipitation as Southern California and therefore do not need to import water like Orange County. As such, not all the Australian plants were built to operate on a base load capacity. Desalinated water is intended to meet a small portion of Orange County’s supply needs as part of its overall strategy to improve reliability through diversification of water sources. The Huntington Beach project’s maximum 56,000 acre feet per year capacity will be approximately 8% of Orange County’s total demand, so it’s only one component of supply designed to offset the need to import an equivalent amount of water that is subject to regulatory and environmental restrictions, making it less reliable. The Huntington Beach plant and its water reliability agreements will be structured such that the public agency customers will always need and use what the facility produces.
Furthermore, Poseidon alone bears the risk of permitting, development, financing, constructing and operating the Huntington Beach Desalination Project. The innovative public-private partnership structure that Poseidon proposes shields Orange County ratepayers from the risk of a failed financing, over-budget construction, or failure to produce water at the amounts specified in the agreements during operations. In fact, the public agencies purchasing the water would not pay for any water until the Project has been constructed and water has been received by the agencies meeting contractual specifications for quantity, quality, reliability and price.
Claim: Poseidon’s beach-front water factory will suck sea life into their intake pipes with the water, kill and puree millions of organisms, then pump out a briny stew and create a dead zone off Huntington Beach.”
Fact: The Huntington Beach Desalination Project will be located east of Pacific Coast Highway, over a quarter mile from the Pacific Ocean on industrial land behind the AES power plant. The desalination project has a certified Subsequent Environmental Impact Report and approved Coastal Development Permit from the City of Huntington Beach, an approved lease with the California State Lands Commission for use of the seawater intake and discharge facilities and a discharge permit from the Santa Ana Regional Water Quality Control Board. In issuing these permits and approvals each local and state regulatory agency determined that the project can be built and operated with no significant impacts to marine life or water quality.
In issuing its approval the Santa Ana Regional Board found that for the desalination project will impinge approximately 0.78 lbs per day of fish, a fraction (less than 25%) of the daily diet of one brown pelican”6 and the discharge from the desalination plant will meet all federal and state receiving water quality standards.
6 Santa Ana Regional Water Quality Control Board Order No. RB-2012-0007, NPDES No. CA8000403; page F-33