Negotiations on Carlsbad Seawater Desalination Agreement Continue

Short Title
Negotiations on Carlsbad Desalination Agreement Continue
Water Authority board receives updates on related project issues

While negotiations continue between the San Diego County Water Authority and Poseidon Resources on a 30-year water purchase agreement for water from the proposed Carlsbad Seawater Desalination Project, the Water Authority Board of Directors today received reports on several major issues related to the project, including terms under which the Water Authority’s member agencies could buy a portion of the project’s supplies.

The Water Authority is in the final stages of negotiations with Poseidon Resources. Once negotiations are complete, the Water Authority will release the draft agreement for public review and open a 60-day public review period. The board is expected to take action on the agreement later this fall.

If approved and built, the Carlsbad plant would produce up to 56,000 acre-feet of desalinated seawater per year, enough to serve 112,000 households of four people.

During the 60-day public review period, the Water Authority’s 24 member agencies will have the opportunity to express interest in buying a share of the desalinated water as a local supply that could provide additional reliability in shortage situations. The agencies would enter into their own contracts with the Water Authority for those supplies. Proposed terms for those contracts were presented to the Water Authority Board of Directors today. They include:

  • The Water Authority would make up to 49 percent of the water it obtains from the desalination project available at full cost to the member agencies.
  • Member agencies would be required to purchase a fixed minimum annual amount of desalinated water for 30 years.
  • If the Water Authority purchases more than 48,000 acre-feet of water from the project in a contract year, each member agency contracting with the Water Authority would be required to purchase a share of the additional water in proportion to its minimum contract amount. Member agencies would have the option to waive access to these additional supplies when they enter into the purchase contract with the Water Authority.
  • If Poseidon’s water deliveries fall short of contracted demands, any shortfalls will be shared proportionately between the contracting member agencies and the Water Authority. Member agencies would only pay for the portion of the water they receive.
  • Member agencies contracting for desalinated water would not have those supplies cut back if the region experiences water supply shortages.
  • Member agencies would be required to pay an annual fee to the Water Authority to cover the administrative costs of the contracts.

Member agencies interested in purchasing desalinated water as local supplies must provide notice to the Water Authority during the 60-day public review period.

The Board also reviewed options for covering the cost of the potential new supply through its rate structure. One option is to integrate desalination project costs into the Water Authority’s array of existing rates and charges; another is to add a new fixed charge to the existing rates and charges. Staff will review input from the Board and further discussions with its member agencies and present a recommended rate and charges policy to the Board this fall.
Staff also reviewed with the Board the long-term water supply reliability benefits of desalinated water from the Carlsbad project.

The Water Authority and its member agencies have been working to diversify the region’s water supply portfolio since the early 1990s, when up to 95 percent of the region’s water was imported and purchased from a single supplier: the Metropolitan Water District of Southern California. By pursuing seawater desalination and supporting member agencies’ local supply projects, by 2020 the Water Authority will reduce its reliance on imported water from MWD to about 30 percent, greatly increasing water reliability for the region.

Looking at potential factors that could affect future water supplies or demands (such as droughts, climate change, regulatory restrictions, greater than expected population growth), under certain circumstances the region could experience supply shortfalls of up to 111,000 acre-feet by 2030. Water from the desalination project would cut such a supply gap by half, making any remaining shortfall much easier to address with recycling projects, conservation or other measures.

During the 60-day review period, the public is invited to provide comments at two special public meetings and at regularly scheduled Board meetings before the Board takes action on the agreement this fall. The special public meetings will be held:

  • * Thursday, Sept. 13, at 6:30 p.m. at the San Diego County Water Authority, 4677 Overland Ave., San Diego (Kearny Mesa area).
  • **Thursday, Sept. 20, at 6:30 p.m. at the Carlsbad Senior Center, 799 Pine Ave., Carlsbad.

NOTE:
*(updated Sept. 7, 2012): For new date(s), click here.
**(updated Sept. 13, 2012): For new date(s), click here.