News Releases
San Diego County Water Authority
Press Release: November 14, 2002 |
Contact:
John Liarakos
Office (858) 522-6703
Mobile (858) 361-4596 |
or
Donna Nenow
Office (858) 522-6707
Mobile (619) 252-6823 |
Water Authority Board Approves Desalination Term Sheet
Final agreement expected in early 2003
The San Diego County Water Authority board of directors today took another
step toward the development of the region’s first large-scale seawater
desalination project. The approval of a term sheet with Poseidon Resources Corporation
could lead to the development of the largest desalination project in the Western
Hemisphere.
The term sheet, a summary of key terms and conditions, provides the basis for
development of a 50-million-gallon-per-day seawater desalination plant located
adjacent to the Encina Power Station in Carlsbad. The term sheet does not obligate
the Water Authority to move forward, but provides the basis for a future detailed
agreement needed to continue development of the project. The Water Authority
board is expected to review the terms of a final detailed agreement in early
2003.
“This is a major step forward in the development of a new, high-quality,
drought-proof supply of water for San Diego,” said Jim Turner, Water Authority
board chairman. “The approval of the term sheet will allow the Water Authority
to begin detailed negotiations with owners of the power station and Poseidon
on the this critically important water project.”
The Encina Power Station is owned and operated by Cabrillo Power I LLC. Poseidon
has been developing the project since 1998 and has an existing contractual relationship
with Cabrillo giving it exclusive rights to develop a seawater desalination
facility at the Encina Power Station site.
Seawater desalination was identified in the Water Authority’s 2000 Urban
Water Management Plan as a significant source of new water supply for the region.
The Carlsbad Seawater Desalination Project would consist of a reverse osmosis
desalination plant producing 56,000 acre-feet of water per year, enough to meet
the needs of 112,000 households in San Diego County. The Water Authority will
be responsible for the construction and operation of the pipelines and ancillary
facilities required to convey water produced from the plant to local and regional
water distribution systems.
The term sheet focuses on key project development issues, including the Water
Authority assuming ownership of the plant after a minimum initial operating
period of five years. This places the risks associated with construction and
initial operation of the seawater desalination plant on the project developer,
Poseidon.
The term sheet also requires the Water Authority have approval rights, involvement
and oversight in the desalination plant development and contractor procurement
activities. In addition, it addresses the Water Authority’s share of cost
savings to be derived from a competitive process of procuring services and equipment
for construction and reductions in the price of electricity. The term sheet
also addresses the Authority’s right to potential project expansion.
The term sheet sets the baseline price of water produced by the plant at $794
per acre-foot in 2001 dollars. Funding expected from the Metropolitan Water
District of Southern California (MWD), through its Seawater Desalination Program,
could provide a subsidy of $250 per acre-foot, which would further reduce the
cost of water to the Water Authority. A decision is expected in December by
the MWD board to enter into negotiations on project funding.
The San Diego County Water Authority is a public agency serving the San Diego
region as a wholesale supplier of water from Northern California and the Colorado
River. The Water Authority works through its 23 member agencies to provide a
safe, reliable water supply to almost three million county residents.
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