Tag Archive | "Poseidon Resources"

Steve Sheldon Watch: OCWD director shills for Poseidon, again


Stephen Sheldon, the Orange County Water District’s elected representative from Irvine, continues to use his government position to benefit Poseidon Resources, Inc., the corporation that wants to build an ocean desalination plant in Huntington Beach.

By doing this, he may be risking the consequences of violating conflict of interest laws.

The OCWD manages the county’s groundwater basin and provides drinking water for 2.4 million residents by selling it to 19 municipalities and special water districts in the county.

The OCWD staff and board of directors are currently leaning heavily toward making ocean desalination part of its “water portfolio” through a business relationship with Poseidon.

Sheldon, a candidate for reelection in November, spoke in favor of Poseidon’s proposed project at a joint planning committee meeting of OCWD and the Municipal Water District of Orange County (MWDOC), held on July 23.

The Poseidon plant would cost about $1 billion and produce 50,000 acre feet of desalinated water a year.

In a plan conceived by OCWD and Poseidon, that desalinated water would replace the same amount of untreated imported water that the district currently buys from the Metropolitan Water District of Southern California (through its retailer MWDOC) for $593 per acre foot. That water is pumped into the groundwater basin.

Poseidon’s desalinated water would cost over three times as much, about $2,000 per acre foot, according to OCWD’s chief engineer, John Kennedy.

Until at least last December, according to Sheldon’s most recent Statement of Economic Interests (SEI), he worked as a consultant for Faubel Public Affairs, a partner of Communications Lab which lists Poseidon as a current client on its website.

Public officials who use their position to influence a government decision that affects them financially have an illegal conflict of interest under California’s Political Reform Act (CPRA) and California Govt. Code 1090.

But during the joint meeting, Sheldon tried to argue that Poseidon’s project would add to the county’s groundwater supply. In fact, as other water officials from OCWD and MWDOC pointed out repeatedly at the meeting, Poseidon’s water would not increase the county’s water supply—above or below ground—by a single drop.

“We’re just really replacing the amount of imported water we need to bring into the region,” OCWD’s Executive Engineer, John Kennedy, explained to Sheldon.

The Surf City Voice previously reported that during a May 21 OCWD board meeting Sheldon advocated for Poseidon and voted to send out Requests for Proposals to several consulting firms to analyze financing options for its desalination project, including direct OCWD funding and ownership.

Sheldon said “No comment” after that meeting when I asked him why he participated in the Poseidon vote. Then he chased after me as I left, only to demand that I tell him if I had electronically recorded his answer.

During a subsequent board meeting, however, Sheldon accused me of misrepresenting the facts about his relationship to Poseidon.

There was no conflict of interest, he said, because public officials are relieved of any potential charges related to a source of income that was discontinued a year or more in the past.

That’s true, but Sheldon’s SEI indicates that relief from potential conflict of interest charges won’t come until December, 2014, at the earliest. That’s because his SEI doesn’t indicate a termination date for his business relationship with Faubel; nor has Sheldon submitted an amendment to it since it was filed last April.

Theoretically, Sheldon could argue that Faubel Public Affairs and Communications Lab are separate businesses, despite public comments by CEO Roger Faubel and Lab founder Brian Lochrie confirming their close business partnership.

Lochrie, a former Faubel employee, started Communications Lab a year ago last April after leaving Faubel’s office with most of his staff and marketing clients, including Poseidon, according to a story at the time in the OC Register.

Lochire took his new entourage to another office in the same building, just down the hall.

Since Sheldon has not clarified his relationship to Poseidon (he did not accept an offer to meet or speak with this reporter at greater length), and any clarifying legal action against him is unlikely before election day, the voters must decide if the wall separating Faubel and Communications Lab is invisible and if Sheldon is being honest about being free of conflict.

But Sheldon’s election opponent, Newport Beach City Councilperson Leslie Daigle, may not be so shy about Sheldon’s Poseidon connection as well as his numerous other ethical and legal dilemmas.

Apparently, her campaign has been using a Facebook account called Steve Sheldon Watch to post links to documents detailing Sheldon’s numerous personal trials and tribulations, including hundreds of thousands of dollars of state and federal tax liens, contract violation lawsuits, and a divorce claim by his wife that he is stealing from his child’s $1 million “off-shore” trust account.

Two of the Facebook posts relate directly to Sheldon’s job as an OCWD director.

One of those posts questions Sheldon’s relationship to Poseidon based on in his 2012 SEI filing—in which he states he directly consulted for Poseidon, asking, “Is that legal since OCWD is studying if they want to buy Poseidon’s desalinated water?”

The other OCWD related post, “nothing but the best for Sheldon,” links to his OCWD expense reports and questions his $1,048 stay at the Ritz Carlton hotel in Los Angeles.

Daigle told the Daily Pilot that she was running against Sheldon because of the OCWD board’s involvement in frivolous lawsuits and its attempt to build a power plant.

Sheldon was one of three OCWD directors, including Denis Bilodeau and Roger Yoh, who as members of the district’s Water Issues Committee (WIC), met secretly with several members of the Anaheim Chamber of Commerce in October, 2013, to smooth the way for building the power plant on 20 acres of OCWD property in the so-called Ball Road Basin in the city of Anaheim.

Many Anaheim residents are opposed to the proposed power plant and want to use the lands for parks and recreation purposes.

The WIC meeting arguably violated California’s open meetings law, known as the Brown Act, so the Anaheim Chamber of Commerce protested. To prevent a lawsuit, the OCWD Board of Directors voted to promise to “cease and desist from prior challenged conduct.”

But the agenda for one of many secretly held OCWD Executive Committee meetings exposed by the Voice through a public records inquiry, reveals that the directors may have broken their legally binding promise.

The Executive Committee agenda for June 10, 2014, contains a discussion item about how to gain leverage for rezoning the Ball Road Basin—if a proposed deal with Competitive Powers Ventures to develop the power plant fell through—by supporting grant requests by Anaheim for developing pocket-parks.

“I believe we could leverage cooperation on these types of soft issues in return for the City helping us kill SB 26 and helping us rezone Ball Road Basin to commercial usage if the CPV deal falls through”, OCWD General Manager Mike Marcus wrote.

The OCWD seems to have backed off its efforts to build a power plant in Anaheim for now, but this month its board of directors voted to study building one in Fountain Valley instead as part of its Long Term Facilities Plan.

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Posted in Headlines, MWDOC, OCWD, Poseidon, Water BoardingComments (6)

OC Water Official Says ‘No Comment’ on Poseidon Vote


By John Earl
Surf City Voice

“No comment!”

That’s all that Director Stephen Sheldon will say about his participation in a recent Orange County Water District discussion that was largely about the financial future of his former employer, Poseidon Resources, Inc.

Specifically, at OCWD’s May 21 board of directors meeting, Sheldon discussed and voted on a proposal to hire consultants to study various cost scenarios, including direct involvement by OCWD, related to an estimated $1 billion ocean desalination plant that Poseidon proposes to build in Huntington Beach.

The OCWD manages the county’s groundwater and provides 75 percent of the water used by ratepayers in its central and northern parts. With its Ground Water Replenishment (sewage recycling) program, the OCWD (with the Orange County Sanitation District) produces enough fresh, clean, drought-proof drinking water for 600,000 people, and there are plans to expand that program in the near future.

Under California’s Political Reform Act, elected officials are prohibited from voting on any project before them in which they have a financial interest or that would affect their economic interests or that financially impacts a company they worked for in the past year.

Working for Faubel

Working for Faubel

The ACT also requires elected officials to disclose financial sources and interests that by its definition cause a conflict of interest.

Those disclosures are contained in a yearly Statement of Economic Interests (700 form) that is on file for each board member at the office of the clerk for the Orange County Board of Supervisors.

OCWD meetings are also subject to California Government Code 1090, which is stricter than the ACT.

Recognizing indirect and direct influences that public officials have on decision making, Govt. Code 1090 prohibits any financial conflict of interest by those officials over contracts, even if the official isn’t voting; those officials, it says, “shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

Under 1090, the board is prohibited from voting on any contract which financially enriches any of its members, even if such a member recuses himself from the matter.

Sheldon’s 2013 Statement of Economic Interests reports working for Poseidon, earning between $10,000 and $100,000 yearly. In 2014 he no longer lists Poseidon as a source of income, but does list Faubel Public Affairs, owned by political consultant Roger Faubel (a former director for the Santa Margarita Water District), as a source of $10,000 – $100,000 of income yearly.

On the FPA website, Poseidon Resources is shown on a list of former and current clients. But on April 1, 2013, according to an article in the OC Register, long-time Faubel business associate Brian Lochrie and his wife, Arianna Barrios, took over most of Faubel’s marketing clients and hired most of his staff under a new business name, Communications LAB, which now lists Poseidon as a client on its webpage.

Faubel and partner

Faubel and partner

But the break-off from Faubel was little more than a rearrangement of chairs, as both Faubel and Lochrie made clear to OC Register reporter Sarah de Crescenzo:

Faubel…said the two firms will have a strategic partnership.
Added Lochrie: ‘We’ll continue to work together closely. (Roger’s) been a wonderful mentor for the last 12 years, and I look forward to continuing to work with him.’

Consistent with that goal, Faubel’s website lists Communications LAB as its “partner agency”, and the “two” companies are located in the same building in suites 200 and 250 respectively.

Sheldon, carefully waiting for his post-Poseidon one-year voting restriction to end, recused himself at the April 2 (2014) OCWD meeting when the board approved the RFP for the Poseidon financial analysis.

But at the May 21 board meeting, Poseidon CEO Scott Maloni whispered that Sheldon could vote on the matter because his legal restrictions had expired a month ago. What Maloni didn’t say is that by working for Faubel, who Maloni spoke with closely throughout the meeting, Sheldon was again on the hook for potential conflict of interest charges.

The Discussion

Director Philip Anthony started the discussion on the proposed Poseidon study by calling it premature to spend the $150,000 that staff recommended to hire two of the five consulting firms that submitted proposals.

“The Poseidon project is hung up by a couple of big things happening at the state level,” he said. “The sad truth is that the Poseidon project…is not clearly defined at this point. It’s subject to huge change based on what these state agencies do. So I suggest we save our money, your money, for the time being.”

Director Kathryn Barr agreed with Anthony, who, after hearing (pro-study) supporting comments made by directors Green, Denis Bilodeau, Vincent Sarmiento, and Roger Yoh, made a motion to defer consideration of hiring the consultants until the Poseidon project was better defined.

Pensive Sheldon

Pensive Sheldon

Then Director Jan Flory boldly suggested that the board wait up to two years to see how Poseidon’s nearly identical Carlsbad desalination plant works and in the hope that new and better technology would emerge that will allow Poseidon to bring forth a more environmentally sound project.

At least three of the eight directors present wanted to table the financial analysis until Poseidon finished its obligation–due ten years ago–to properly study sub-surface ocean intakes. Poseidon claimed before the Coastal Commission last November that sub-surface intake is infeasible for is chosen Huntington Beach location due to the local ocean topography, but the Commission called Poseidon’s submitted studies inadequate.

The only feasible option, according to Poseidon, is to co-locate its desalination plant with the AES power plant, located in southeast Huntington Beach, and use its “once-through-cooling” (OTC) intake pipes to gather the needed 127 million gallons of water that it would convert into 50 million gallons of drinking water daily.

Flory, Anthony, and Barr also wanted to wait for an expected decision by the State Water Board on the future use of OTC, if any, for ocean desalination plants. The board banned once-through-cooling for power-plant use because of its deadly mass effect on marine life.

Also to be resolved before the Commission is an appeal by Poseidon’s opponents of an enabling Coastal Development Plan approved by the city of Huntington Beach in 2006.

Doing all of that would take at least another six months.

Frustrated by the concerns of three of his colleagues, Sheldon said it was unfortunate that they had been “listening to misinformation by some of the opponents of this [Poseidon desalination] project,” potentially causing a delay over environmental issues that had already been asked and answered long ago.

“I think we have an obligation to our ratepayers,” Sheldon said, “[and] to our representatives, that we continue to study, that we spend an amount of money that is necessary to move forward.”

Poseidon’s desalination project is “important”, he added, and “is going to be a great benefit in the years to come.”

Sheldon then called Maloni to the speaker’s podium.

Maloni explained the “urgency”, from Poseidon’s point of view, for the OCWD to act now.

“One of the questions raised at the Coastal Commission meeting [in November] was, who’s the customer? Where’s the water going to go? How do we know the water [production] needs to be a 50 million gallons per day plan?”

Scott Maloni

Scott Maloni, Poseidon Resources, Inc.

Maloni’s list of questions are important because at this time only one water agency in Orange County (Faubel’s former water district, ironically) is indicating a real interest in obligating (per Poseidon’s terms) its ratepayers to buy Poseidon’s desalinated water–which will cost three to four times the normal rate –even if that water isn’t needed.

“That question needs to be answered when we go back to the Coastal Commission,” Maloni told the board, “and it can’t be answered if you don’t take your first step in due diligence to evaluate the financial impacts of the project.”

But Maloni must also be concerned about the public relations momentum that Poseidon has lost in recent years as public skepticism about the need for its Huntington Beach project, if not ocean desalination itself, grows stronger.

That makes Sheldon’s role as the OCWD plant for the partnership of Faubel Public Affairs and Communications LAB vital to the future financial well being of their client, Poseidon Resources, Inc.

But Sheldon is loath to acknowledge his mole-role in public, as shown when he glared, silently, at Director Anthony when he pointedly asked Sheldon, “So, I guess you’re okay to talk about Poseidon now? … You’re free?”

Green answered for Sheldon, injecting his silence with a simple, “Yeah,” as if, “Well, yeah, of course he is!”

After some more discussion (including a hilarious soliloquy by Green about needing to complete the Poseidon desalination project so she wouldn’t have to use Porta-Potties), the board, under pressure from Director Denis Bilodeau, voted 7-1 (Green voted no, Dewayne and Sidhu were absent) to continue the item until June 4.

After the meeting, I approached Sheldon, Samsung tablet in one hand and pen in the other, and asked him what the difference was between past meetings, when he had recused himself from Poseidon related agenda items, and that night (May 21).

Alarmed by the question, he pushed himself back in his chair, and said, firmly, “No comment.” Again, I asked, and again the answer was, “No comment.”

As I started to walk away, Sheldon panicked and demanded to know if I had recorded our “conversation.”

“It’s a public meeting,” I answered, as I continued to walk out of the board room, ignoring him as he called after me. Green, who overheard our exchange, gasped, presumably in Sheldon’s favor.

After following me outside the board room, Sheldon approached and asked, again, “Did you record our private conversation?”

I tried to explain to him that it wasn’t a private conversation, but I did not tell him if I had recorded it or not. But he persisted.

“I don’t have to answer your question,” I told him, adding my own “No comment” when he pressed yet again.

“Alright,” Sheldon warned, “You’re going to hear from our lawyer.”

On Monday, May 26, I sent the following email to Roger Faubel, ccd to Director Sheldon:

Given Faubel Public Relations’ (sic) past contractual relationship with Poseidon and your firm’s (self professed) partnership relationship with Communications LAB, as well as your continued interest in the Poseidon project, as demonstrated by your presence and frequent close conversation with Poseidon’s VIP (sic), Scott Maloni, at the meeting, as well as Director Sheldon’s response of “No Comment” when I asked about his vote, is there any reason why the public should not assume that the director did not illegally participate in the discussion and subsequent vote on the Poseidon related RFP?

So far, I have not received an answer.

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Posted in Headlines, OCWD, Poseidon, Water BoardingComments (5)

Poseidon’s Water Boy: Mayor/Assembly-Candidate Matt Harper Quietly Pushes Desal Scam Past Ratepayers


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.

HB City Councilmember Matt Harper. Photo: Arturo Tolenttino, SCV

HB mayor Matt Harper. Photo: Arturo Tolenttino, SCV

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.

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Posted in Environment, Headlines, Poseidon, WaterComments (2)

A REBUTTAL TO POSEIDON RESOURCES’ ‘FACT vs. FICTION’ FLYER


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 republished it here. NoWaterDeal issued the counter rebuttal to Poseidon recently. 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.

By NoWaterDeal.com

Recently Poseidon Resources, through their media produced an open letter titled: “Don’t be misled by anti-desalination campaign mailer. Get the facts here.”

This letter makes a futile attempt to dispute the facts surrounding the Poseidon Huntington Beach Seawater Desalination Facility as presented in the No Water Deal With Poseidon mailer and website, which can be seen at www.nowaterdeal.com. Below we directly address the statements in their letter with the real facts regarding the project.

Statement: “Desalinated seawater will replace the need to import water; thus eliminating the imported water costs; however, in their calculation, opponents failed to deduct the avoided cost of imported water. This is an uninformed mistake.”

Fact: Jeff Kightlinger the Executive Director of The Metropolitan Water District (MET), the main water provider for Southern California has stated that the MET will not import less water from the delta or the Colorado River due to the existence of the Poseidon Huntington Beach Desalination Plant (personal communication on 3/18/2013). As another example, Poseidon signed a contract with MET in 2009 that included a section stating that the contract would be terminated if MET is required…to reduce defer, or exchange entitlement to or reduce usage of Colorado River water, State Water Project water, or other supplies…as a result of expected or actual Production of the Desalinated Seawater by the Project(Section 13, pg. 21 of the Draft CSDP Agreement 70025). It is quite clear that any water Poseidon produces will not replace imported water, and Poseidon knows that.

Statement: “If the cost of imported water continues to escalate as it has over the past twenty years, then over the life of the desalination project, Orange County water ratepayers will see a net savings, not a net increase in their water bill.”

Poseidon, god of the sea.

Poseidon, god of the sea.

Fact: Such claims have been made for at least 12 years and have not come to pass and probably never will. In presentations by Poseidon in 2003, they estimated that the cost of imported water would equal or exceed that of desalinated water in the 2013-14 timeframe. Here it is 2013 and that has not come to pass. On the contrary the proposed price per acre foot for desalinated water for the Huntington Beach project is about $1,700 compared to $400 for our abundant Orange County groundwater, $700 for imported water and $800 for local recycled water. So even over time desalinated water has remained far more expensive than all other supplies and is likely to remain so. Poseidon’s present prediction for the imported = desalinated water cost equation is for 2024-25 timeframe. It is interesting that this water cost equation is always predicted 10 to 12 years out. You be the judge of who’s being factual.

Statement: “Enforceable agreements between Poseidon and the City of Huntington Beach guarantees that Huntington Beach residents will pay less for water then they would without the desalination project.”

Fact: Huntington Beach signed an “Owner’s Participation Agreement” (“OPA”) with Poseidon Resources that includes the discounted purchase of some desalinated water. However, the discount will only apply to the first 3 Million-gallons-per-day (Mg/d) of 10 Mg/d total and to an emergency supply for 10 Mg/d for 7 days. (NOTE: What constitutes an “emergency” remains unstipulated.). So Huntington Beach will pay full price for 70% of the water received from the project

Statement: “A recent negative campaign mailer circulated by opponents erroneously claims the project will add $5 billion dollars to local water bills over the next 30 years.”

Fact: Unlike Poseidon’s often fuzzy math , the No Water Deal With Poseidon mailer states the precise arithmetic it used to come up with the “$5 billion” figure. All the numbers were derived from Poseidon’s own term sheet for the purchase of water produced by its HB project plant. You be the judge of who’s being factual.

By the way, the No Water Deal With Poseidon mailer is not “anti-desalination”. It does, however, provide the facts regarding irresponsible desalination projects like Poseidon Resources has proposed for Huntington Beach.

No Water Deal With Poseidon

www.nowaterdeal.com

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Posted in Headlines, PoseidonComments (3)

Rebuttal to Poseidon Critics from Poseidon Resources, Inc: Huntington Beach Desalination Project


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

– 2014.

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.”

Scott Malonie

Scott Malonie, Poseidon Resources Inc., Vice President: Photo SCV

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

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Election Changes: Poseidon Desalination Plan Isn’t Popular With New Huntington Beach City Council


By John Earl
Surf City Voice

Poseidon, the God of the Sea, might have suffered a tsunami headache after seeing the results of the Nov. 6 election for the Huntington Beach City Council.

That’s because in December, when three newly elected city council members are sworn into office, the current 5 – 2 majority of the faithful will become a solid 5-2 majority of non-believers in Poseidon Resources Inc.’s nearly $1 billion ocean desalination plant proposed for the southeast corner of Huntington Beach.

Since 2004, the council has approved city permits and certifications for the desalination project regardless of incomplete environmental impact reports, threats to a fragile marine eco-system, the need to dig up local streets for a 10-mile-long pipeline, and skyrocketing cost increases ($150 million to nearly $1 billion).

All that in order to give water to Orange County residents that will cost them about three times as much as water from other sources and for a project that eschews sustainable water and energy management, including conservation, in favor of unlimited exploitation of natural resources for maximum corporate profit, regardless of the long-term consequences of urban sprawl and global warming.

Two of the newly elected Poseidon opponents, Jill Hardy and Dave Sullivan, return to the council after two previous terms ending in 2010 in which they voted repeatedly against the project. The third, newcomer James Katapodis, supported Poseidon in his previous unsuccessful election attempt but changed his position after meetings with local Poseidon opponents.

They will join incumbents Connie Boardman and Joe Shaw to form a new anti-Poseidon city council majority.

In desperation, Poseidon helped fund three sleazy anti-Hardy mailers that portrayed her as “anti-children” and all but a child molester for opposing a lift on the city’s ban on fireworks.

But that plan seemed to backfire.

Polling conducted a few weeks prior to the mailers showed Hardy coming in second behind Dave Sullivan, with pro Poseidon candidate Barbara Degleize next. But Hardy finished with over 2,000 votes more than Katapodis and Sullivan who finished second and third respectively.

Whether the new anti-Poseidon city council will be able to stop Poseidon’s ocean desalination dream from becoming reality seems doubtful but not impossible.

First, the Municipal Water District of Orange County is pondering the purchase of Poseidon’s water for resale to its 28 member agencies in Orange County (as opposed to the current strategy of separate agreements between the company and each agency). That would give the city a vote on whether MWDOC should enter into an agreement with Poseidon or not, in which case the new council would be inclined to vote no.

Second, Poseidon’s Coastal Development permit is under appeal before the Coastal Commission. The issue is whether the city violated its own Local Coastal Plan. Depending on how the Coastal Commission rules, the permit could be sent back to the city council for another vote.

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Posted in Energy, Environment, Headlines, MWDOC, Poseidon, WaterComments (3)

Interview with Mesa Water’s Paul Shoenberger on CalDesal


By John Earl
Surf City Voice

In January, I sat down for 30 minutes with Paul Shoenberger, the general manager for the Mesa Consolidated Water District in Costa Mesa, California, to talk about CalDesal a non-profit organization whose 70 or so members, according to April, 2011 stats (neither Mesa nor CalDesal will release up to date figures), are about evenly divided between public water agencies and private water-related companies.

CalDesal lobbies for the construction of ocean and groundwater water desalination (although the emphasis is mostly on ocean desalination) and for the “streamlining” of environmental regulations to help achieve that goal.

Mesa Water Directors James Atkinson and James Fisler mix up business with pleasure at CalDesal mixer. Photo: Public records

Shortly into the 21st Century, plans to build ocean desalination plants where proposed for the cities of Carlsbad and Huntington Beach. Most of the permitting process has been completed for both plants but huge financial obstacles remain after construction costs and estimated water rates have skyrocketed.

Poseidon Resources Inc. would build the two nearly identical ocean desalination plants, each of which will suck in over 100 million gallons of sea water each per day to produce 50 million gallons of potable drinking water. They would be the largest ocean desalination plants in the United States at an estimated cost of over $700 million each.

In 2006, twenty-nine ocean desalination plants of various sizes were envisioned for the California coastline all the way to Santa Cruz, including a 15 million gallon per day facility that just finished its testing phase in Dana Point.

But after more than a decade of planning and marketing, and pushing projects through the planning and permitting process, a tight coalition of water industry leaders, real estate developers, and public-sector technocrats is far from realizing its desalination dream.

Only nine ocean desalination proposals remain in contention and not a single one has broken ground or seems likely to anytime soon.

That’s good news for opposition groups who have long claimed that ocean desalination is too costly and damaging to the ocean environment, and that conservation, sewage water reclamation, and increased water capture and storage are the right methods for ensuring an adequate water supply for California in the future.

Shoenberger and other proponents, however, officially insist that ocean desalination is not a “silver bullet” but will be a vital part of California’s water portfolio. They depict the process as environmentally sound and sustainable and say that costs for desalinated ocean water will one day be less than the costs of imported water from the San Joaquin Delta and the Colorado River.

In any case, they say, developing ocean desalination infrastructure is worth the extra cost due to potentially disastrous water supply outcomes for California from earthquakes and drought, and that it will help create badly needed jobs.

But public opposition to building ocean desalination plants along the coast has grown stronger over the past decade along with other potential obstacles to plans to construct ocean desalination plants in California.

CalDesal mixer and board meeting

Paul Shoenberger (r) with CalDesal member at 2011 spring board meeting/mixer. Photo: Public records

Once-through-cooling, the intake method preferred by desalination proponents because it sucks in huge quantities of sea water through already existing intake systems attached to electrical power generating plants – like exist in Carlsbad and Huntington Beach – is deemed destructive to the coast’s fragile balance of marine life by ocean scientists, and state regulators have ordered it to be phased out within a decade.

How that ban will apply to ocean desalination, if at all, is under consideration by state regulators. Opponents and proponents are vying for influence in that debate.

In the midst of a weak economy, and as the research and development needed to provide the promised cost-saving technological improvements has reached a dead end, even some long-time ocean desalination proponents are now questioning the efficacy of large desalination projects. Read the full story

Posted in Environment, Headlines, Poseidon, Water, Water BoardingComments (6)

Water Board’s Penthouse-View Meeting: More transparency please, and save some food for the water buffaloes


By John Earl
Surf City Voice

A “special” meeting of the Board of Directors of the Municipal Water District of Orange County (MWDOC), originally designed by Best Best & Krieger of Irvine– the largest public agency law firm in California – to schmooze its new clients, became a public embarrassment Tuesday when the plush solitude of its penthouse-view executive board room was invaded by a small band of transparency advocates.

MWDOC meetings are normally held on the ground (and only) floor of its home office, humbly but conveniently located next to the County’s sewage treatment plant in Fountain Valley.

Despite the surprise BBK location, in addition to the usual inconvenience of morning meetings that are designed to accommodate MWDOC’s directors, most of whom are retired from professional life, but not the working public, 10 citizens at large—a rare turnout by MWDOC standards—attended, barely fitting into a small setting that clearly wasn’t intended for them.

But that setting was perfect for MWDOC’s seven water buffaloes: a towering view of Irvine’s skyline to be enjoyed with two large bowls of salad, what looked like two large dishes of lasagna, and plenty of chunky chocolate chip cookies, all nicely placed buffet style.

BBK’s recent additions, partner Russell G. Behrens and counsel Daniel J. Payne, both know what six of the seven MWDOC directors like (the seventh, Wayne Osborne, is a new comer) because they worked for them before as part of Kidman Behrens and Tague.

In January they left KBT for BBK and took MWDOC with them, entering into a five month test, according to MWDOC’s General Manager, Kevin Hunt. The purpose of Tuesday’s meeting was for BBK to seduce and corral MWDOC’s water buffaloes, thus sealing the deal.

So BBK’s managing partner, Eric Garner, used his very brief presentation to try to impress the board with the firm’s expertise in public agency law in general and water law in particular.

“When I’m not managing lawyers, I do still practice water law,” Garner cheerfully explained. “It would be a great privilege to work with the district if the opportunity ever arises for the need for my expertise. I can’t imagine ever practicing any water (sic) but water law to me. It is by far the most fascinating, interesting area in the legal world.”

Garner might get that opportunity to use his expertise sooner than he expected; but, judging from the sour look on his face, he wasn’t happy to hear former Huntington Beach mayor Debbie Cook infer that the opportunity would only arrive due to BBK’s incompetence. Read the full story

Posted in Environment, Headlines, MWDOC, Poseidon, Water, Water BoardingComments (2)

Comment: Water Agency Should be More Transparent on Huntington Beach Desal Plant


By Joe Geever
Surf Rider Foundation

Joe Geever is the Water Programs Manager for the Surf Rider Foundation, which works to protect ocean resources. He made these comments at the May 15 meeting of the Board of Directors of the Municipal Water District of Orange County. Originally, the directors had planned to go into closed session to discuss pricing arrangements for water to be delivered from an as yet unpermitted and unfinanced ocean desalination plant proposed by Poseidon Resources Inc. to be built in Huntington Beach, California. The meeting was criticized as a violation of California’s open meetings law, the Brown Act, and postponed until September.

My name is Joe Geever and I’m with the Surf Rider Foundation.

I don’t know if all the board members remember – the staff certainly does – that we actively supported your  desal pilot plant in Doheny. And we did that for two reasons. One, because we thought that research needed to be done to identify what the best intake for minimizing marine life mortality was. But also because of the assurances that staff gave us that this would be a completely open, transparent, public process in everything that went on with that project. And they have kept to that promise.

Now what I read is that this process [for the closed Poseidon meeting] is quite different. It feels as if you’re trying to find what the legal limits are for avoiding public transparency.

I guess I would urge you to lean in the other direction, to be as open and transparent and involve the public as much as possible from the beginning.

In my mind, it’s kind of ironic that you’re waiting to see how things play out with San Diego Count with the water purchase agreement from there because I think that’s the model for how not to do it.

The project proponent [Poseidon Resources] would like to blame all the delays on regulatory processes, when actually that project has been stalled because of information withheld or information that was submitted to regulatory agencies that was later discovered to be false. And all of this was happening behind closed doors. It hasn’t helped them move the project forward and it hasn’t engendered any kinfo of public confidence in the project at all.

You can get attorneys together and argue for minimal transparency and public participation and probably have a lot of legal battles over that. Or, you can lean the other way, toward as much transparency and public participation as possible, like you have in Dana Point, and see where the chips fall. So, I would urge you to lean that way.

 

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Posted in Environment, Headlines, MWDOC, Poseidon, Water, Water BoardingComments (1)

GM Nixes Secret Desal Talks with Poseidon After Brown Act Complaints


By John Earl
Surf City Voice

Confronted by complaints of illegality, the Municipal Water District of Orange County (MWDOC) dropped a scheduled closed session section of a meeting of its board of directors scheduled for today (May 15) at 11 a.m.

General Manager Kevin Hunt had scheduled the closed session in order to meet with officials of Poseidon Resources Inc., the company that proposes to build the as yet unfinanced and unpermitted $750 million ocean desalination plant that would convert about 100 million gallons of ocean water into 50 million gallons of drinking water every day.

The public meeting will go ahead minus the Poseidon item, but instead of holding session at MWDOC’s regular location in Fountain Valley, the seven board members will meet at the offices of the agency’s new legal team, Best, Best & Krieger (BKK).

Lunch will be served, according to the agenda.

The topic of discussion for the now deleted closed session item, according to the original agenda, was “price and terms of payment” for the water that Poseidon would produce.

California’s open meetings law, the Brown Act, requires that all legislative meetings be open to the public, with certain exceptions like negotiations for the sale or lease of real property. Water rights are treated as real property and Hunt, under advice from BKK, assumes that Poseidon holds water rights for the drinking water it will presumably produce, according to Hunt, a view that is disputed. Read the full story

Posted in Environment, Headlines, MWDOC, Poseidon, Water, Water BoardingComments (4)

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