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Leading the Nation in Seawater Desalination

The Water Authority added desalinated seawater to its supply portfolio in 2015 with the start of commercial operations at the nation’s largest seawater desalination plant – the result of a public-private partnership in the coastal town of Carlsbad. This new, drought-proof supply reduces the region’s dependence on supplies that are vulnerable to droughts, natural disasters and regulatory restrictions.

Overview

Carlsbad Plant

A landmark public-private partnership

In November 2012, the Water Authority approved a 30-year Water Purchase Agreement with Poseidon Water for the purchase of up to 56,000 acre-feet of desalinated seawater per year, approximately 10 percent of the San Diego region’s water demand.

Poseidon is a private, investor-owned company that develops water and wastewater infrastructure. Under the Water Purchase Agreement, Poseidon built the Claude “Bud” Lewis Carlsbad Desalination Plant, and a 10-mile conveyance pipeline to deliver desalinated seawater to the Water Authority’s aqueduct system.

The Water Purchase Agreement assigns appropriate risks to the private sector while keeping costs for water rate payers as low as possible. The agreement transfers to Poseidon and its investors the risks associated with design, construction and operation of the desalination plant.

The Water Authority purchases water from the plant at pre-defined prices. If the water does not meet quality requirements specified in the agreement, the Water Authority does not pay. The agreement also specifies that the Water Authority has the right to ensure that the plant is operated and maintained in a safe, efficient manner consistent with industry standards. At the end of the agreement’s 30-year term, the Water Authority may purchase the plant for $1.

drinking water stoarge tanks at desalination plant

About the plant

The plant provides enough high-quality water to serve about 400,000 people. It is part of a $1 billion project that includes the nation’s most technologically advanced and energy-efficient seawater desalination plant, a 10-mile large-diameter pipeline and improvements to Water Authority facilities for distributing desalinated seawater throughout San Diego County.

Water from the Carlsbad plant is more expensive than the region’s traditional imported water sources, but it has the significant advantages of being drought-proof and locally controlled. The plant also is south of the major Southern California fault lines, providing added water supply security in case an earthquake severs imported water supply lines.

Desal Process

What Is Desalination?

Desalination uses reverse osmosis technology to separate water molecules from seawater. Water from the ocean is forced through thousands of tightly-wrapped, semipermeable membranes under very high pressure. The membranes allow the smaller water molecules to pass through, leaving salt and other impurities behind.

infographic outlining the 3 steps of desalination.  This information is also summarized in the paragraph abo e this image.
Want to dig deeper and learn more?
download this documentDesalination Fact Sheet
<strong>Environmental Responsibility</strong>

The Carlsbad Desalination Project will meet rigorous environmental standards set by state and local agencies, including the California Coastal Commission. By boosting the project’s energy efficiency, offsetting greenhouse gas emissions and enhancing coastal habitat, the project was designed with environmental stewardship in mind.

Poseidon’s Climate Action Plan calls for the plant to be net carbon neutral over 30 years by offsetting greenhouse gas emissions from project operations. It will be the first major California infrastructure project to offset its carbon footprint. This will be done through the purchase of carbon offsets and energy recovery technology at the desalination plant.

Energy recovery devices will save an estimated 116 million kilowatt-hours of energy per year, reducing CO2 emissions by 42,000 metric tons annually – roughly equivalent to the annual greenhouse gas emissions from 9,000 passenger vehicles.

Poseidon also is restoring 66 acres of wetlands in San Diego Bay.  The project involves excavating and grading a former salt production pond to create a mosaic of coastal habitats beneficial for a variety of fish and bird species.

In addition, Poseidon is preserving the 400-acre Agua Hedionda Lagoon by assuming responsibility for the continued stewardship of the lagoon.

link2006 Final EIR and 2009 First Addenda download this document2012 Second Addendum download this document2012 Second Addendum MMRP linkApproved Permits and Plans
<strong>Financial Affordability</strong>

The cost of water

Water from the Carlsbad Desalination Plant is more expensive than the region’s traditional imported water sources, but it has the significant advantages of being drought-proof and locally controlled. The plant also is south of the major Southern California fault lines, providing added water supply security in case an earthquake severs imported water supply lines.

Desalinated water from the plant costs typical homeowners about $5 per month, at the low end of projections when the project was launched in late 2012. The costs are factored into the Water Authority’s 2016 and 2017 rates.

Based on current electricity cost estimates, the Water Purchase Agreement sets the price of water from the Carlsbad Desalination Plant at $2,125 to $2,368 per acre-foot in 2017, depending on how much is purchased annually. The first 48,000 acre-feet of water purchased each year will pay for the fixed costs of the project and the variable costs of water production. The Water Authority has the option to purchase an additional 8,000 acre-feet per year at a lower rate that reflects only the variable costs of incremental water production.

The Water Purchase Agreement allows for annual price increases for inflation estimated to average 2.5 percent per year. This compares favorably to the average 9.9 percent increase per year in imported treated water rates imposed by MWD from 2005 through 2018. In addition, Poseidon will be allowed to increase its price to accommodate changes in law or regulations that generally apply industry-wide to water treatment and desalination facilities. These cumulative increases are capped at 30 percent over the 30-year term of the agreement.

In December 2012, financing for the Carlsbad Desalination Project closed successfully, bringing with it $734 million in tax-exempt bond financing. The Water Authority worked with Poseidon to secure a favorable interest rate of 4.78 percent, saving an estimated $200 million in financing costs over three decades compared to earlier projections. Independent analysts cited the Water Authority’s financial stability and strong credit ratings, along with the strategic importance of the desalination plant, as critical factors in their positive assessments of the debt.

Water Purchase Agreement Documents

For more information on the Water Furnishing Revenue Bonds, Series 2012 (San Diego County Water Authority Desalination Project Pipeline) (Series 2012 Pipeline Bonds), including CUSIPs and the Limited Offering Memorandum, please click here.

Water Purchase Agreement (Technical appendices to the agreement are available on request)