By John Earl
Surf City Voice
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
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.