Water Authority board authorizes new discussions on regional 
seawater desalination project

Short Title
Water Authority board authorizes new discussions on regional 
seawater desalination project
Agrees to Carlsbad’s request for meetings with key stakeholders
August 12, 2004

The San Diego County Water Authority board of directors today authorized staff to convene meetings with key stakeholders in the development of a regional seawater desalination project at the Encina Power Station in Carlsbad.

The decision to initiate meetings involving the Water Authority, the city of Carlsbad, Cabrillo -- the owner of the Encina Power Station -- and Poseidon Resources, the Stamford, Conn.- based company that holds a lease on some of Cabrillo's property, responds to a request by the city of Carlsbad for the Water Authority's involvement and cooperation on a regional seawater desalination project.

"Seawater desalination is an integral and vital part of San Diego County's future water supply reliability," said Bernie Rhinerson, Water Authority board chairman and chair of its seawater desalination ad hoc committee. "It is in the best interest of our community for the Water Authority to renew discussions, so we can move this project forward."

The discussions will focus on the potential structure of a public-private partnership and the business concerns of each entity.

"Any partnership created to implement seawater desalination in Carlsbad must be in the best interest of the region's ratepayers," said Rhinerson. "The board of directors has clearly stated the fundamental principles that must be included if a public-private partnership arrangement is to be pursued."

The principles include: long-term public ownership; public oversight and control; open and fair competition in the design, construction and operation of a facility; fair and reasonable costs that are fully and publicly disclosed; and, contractual guarantees of construction quality and operational reliability.

In January 2004, the Water Authority suspended development negotiations with Poseidon Resources. The decision to suspend development negotiations allowed the city of Carlsbad and Poseidon Resources the opportunity to explore the viability of a privately-owned, seawater desalination project that could serve the local needs of Carlsbad and other local water agencies.

In September 2003, the Water Authority began a comprehensive environmental impact report on a regional seawater desalination plant at the Encina site. To complete the EIR by late 2005, the Water Authority must gain temporary, short-term access to the facility site on the Encina Power Station property to conduct environmental studies such as site and hazardous materials reconnaissance, water quality sampling and geotechnical assessments and seismic analysis.

A staff report presented to the board today stated that progress to date on the development of the local project did not relieve the Water Authority of its obligation to continue planning a regional project or defer action on completion of its own EIR. Based on the status of the local project negotiations and Carlsbad’s request, the board authorized staff to seek voluntary access to the property to conduct the tests needed to complete the Water Authority's EIR.

In today's action, the board voted unanimously to:

  1. Direct staff to negotiate an Inter-Agency Agreement with the City of Carlsbad, Carlsbad Municipal Water District, Carlsbad Housing and Redevelopment Agency, regarding coordination and mitigation for a regional seawater desalination facility.
  2. Authorize staff to complete the Environmental Impact Report (EIR) for the Regional Seawater Desalination Project at the Encina Power Station and to seek voluntary access to the site with the clear understanding that nothing in this action is intended to authorize or suggest acquisition of Poseidon or Cabrillo’s property interests by eminent domain.
  3. Direct staff to enter into discussions with Cabrillo Power, as the site host and owner of the Encina Power Station, to understand the status of their interests, goals and objectives relative to a municipal water supply project on their property, the status of their business relationship with Poseidon Resources of Stamford, Connecticut, and areas of joint cooperation.
  4. Direct staff to begin discussions with the Carlsbad Agencies, Poseidon and Cabrillo on the potential structuring of a public-private partnership for a regional seawater desalination project at the Encina Power Station.
  5. Reaffirm the Water Authority’s support for local supply development as stated in the February 25, 2004 letter from Chairman Rhinerson to Mayor Lewis.
  6. Direct staff to place the Encina Seawater Desalination Project as an action item on each month’s Board agenda.

Development of seawater desalination as a regional water supply is the cornerstone of the Water Authority’s plans to diversify the region’s water supply portfolio and is the centerpiece of the agency’s $3.1 billion capital improvement program. The Water Authority’s Seawater Desalination Program represents the largest commitment to seawater desalination in the United States and is expected to provide up to 15 percent of the region’s water needs by 2015.

The San Diego County Water Authority is a public agency serving the San Diego region as a wholesale supplier of water from the Colorado River and Northern California. The Water Authority works through its 23 member agencies to provide a safe, reliable water supply to support the region’s $130 billion economy and the quality of life of 3 million residents.

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