Water Authority suspends talks with Poseidon Resources

Short Title
Water Authority suspends talks with Poseidon Resources
Water Authority proceeds on studies for Water Authority project at Encina Power Station
January 29, 2004

The San Diego County Water Authority board today voted to suspend development negotiations with Poseidon Resources for a seawater desalination facility at the Encina Power Station in Carlsbad. The Water Authority will, however, continue its independent studies on the Encina project for a Water Authority seawater desalination project.

Action to suspend negotiations with Poseidon followed six months of unsuccessful talks with the private development firm to resolve a dispute over a 2002 confidentiality agreement.

“Poseidon characterized the confidentiality agreement as a ‘non-compete’ agreement,” said Bernie Rhinerson, chairman of the Water Authority’s board of directors. “Poseidon’s position, asserted time and time again during our discussions, was that the provisions of the confidentiality agreement precluded the Water Authority from moving forward with a project at the Encina site unless it did so exclusively with Poseidon. The Water Authority disagrees with that view. Indeed, competition among the private sector for the public’s business is what ensures the public a fair price.”

Rhinerson emphasized that the Water Authority will continue its own independent planning for a regional desalination project at the Encina site.

“The Water Authority has under way an environmental impact study and a distribution system engineering analysis on the Encina project, and these will continue,” Rhinerson said. “Seawater desalination could provide as much as 15 percent of this region’s water supply by 2020, and the Water Authority is committed to that goal.”

The Water Authority’s Encina project is one part of the agency’s broader seawater desalination program. The Water Authority is conducting a pre-feasibility study at the San Onofre Nuclear Generating Station and a feasibility study that is exploring locations in South County for future seawater desalination facilities.

Several other factors contributed to the decision to suspend development talks with Poseidon. The suspension of discussions with Poseidon allows the Water Authority the time to analyze those factors, one or more of which may change the timing of a desalination project. These factors include:

  • The recent completion of the Quantification Settlement Agreement provided a new, and unexpected source of water to the region: water from the lining of the All-American and Coachella canals. Those projects will provide, beginning in 2008, San Diego County with a highly reliable, annual water supply of 77,700 acre-feet of water for the next 110 years.
  • The Water Authority’s rate analysis of its draft Regional Water Facilities Master Plan, currently under way, and evaluations of options for increasing the region’s treated water capacity, will help determine the most appropriate timing for the development of a regional seawater desalination project.
  • Problems being experienced in a Tampa Bay desalination project. How problems with the Tampa Bay facility are ultimately remedied could affect how the Water Authority structures any future development agreement for a desalination project in San Diego County.
  • Interest expressed by the city of Carlsbad in considering Poseidon’s proposal as a local water supply opportunity for its community

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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