SAN DIEGO (AP) — The San Diego
County Water Authority announced a tentative agreement Thursday to buy
the entire output of what will be the Western hemisphere's largest
seawater desalination plant, clearing a major hurdle for construction to
begin.
The plant in Carlsbad will produce 50 million gallons a day, enough to supply about 7 percent of the San Diego region in 2020.
The
agreement is subject to approval by the water authority board. Upon the
board's approval, the developer — Poseidon Resources LLC — would sell
bonds to finance 82 percent of the project, which is estimated to cost
about $900 million to build.
The water authority expects the plant in the north San Diego suburb and a 10-mile pipeline to be completed in 2016.
Under the pact, San Diego
would pay $2,042 to $2,290 for an acre-foot of water — nearly all of it
to Poseidon and more than twice what it pays to buy water from outside
the region. For supporters, the premium is well worth the price to make
the region less dependent on imported water from the Los Angeles-based
Metropolitan Water District of Southern California, which supplied
almost all its water in the early 1990s and still provides nearly half.
"The story of San Diego has always been about the quest for reliable water," said Dennis Cushman, the San Diego
agency's assistant general manager. "The history is drought and water
supply shortage and being subject to decisions made by a board of
directors in downtown Los Angeles ... This is about water reliability."
The water authority, a wholesaler to 24 cities and agencies including the city of San Diego,
says the average household water bill will increase about $5 to $7 a
month when deliveries begin. It estimates the cost is comparable to
other new, local sources of drinking water, like treated toilet water or
briny groundwater.
The 30-year purchase agreement calls for the San Diego agency to purchase between 48,000 and 56,000 acre-feet of water a year from the plant, or enough to supply about 100,000 homes.
Poseidon,
based in Stamford, Conn., was plagued with cost overruns and delays at
its desalination plant in Tampa, Fla., which produces up to 25 million
gallons a day.
Ken Weinberg, the San Diego
agency's water resources director, said Poseidon underestimated costs
on the Tampa plant and had problems with its contractor that he is
confident will not be repeated.
"In the front of our minds was to Tampa-proof this project," Weinberg said recently.
Poseidon spokesman Scott Maloni said the company learned from the Tampa project and that the San Diego agency is fully protected if the plant fails to perform as promised.
"This is definitely an important milestone, one that we've been looking forward to for a long time," Maloni said.
Tom
Pankratz, editor of Water Desalination Report, said the Carlsbad plant
will easily become the hemisphere's largest seawater desalination plant,
surpassing one in Trinidad and Tobago that produces up to 40 million
gallons a day.
Desalination has helped quench demand in Australia,
Saudi Arabia and other countries lacking fresh water, but it has
struggled to catch on in the United States.
The plants can blight
coastal landscapes, require massive amounts of electricity and dump
millions of gallons of brine back into the ocean that can, if not
properly disposed, be harmful to fish.
"The (Carlsbad) project
will be somewhat of a bellwether or indicator of how desalination
progresses in the U.S.," said Pankratz. "Some say it will be the last
one. Others say the dam will burst and the floodgates are open."
Poseidon
proposed the project more than a decade ago and has been negotiating
with potential buyers since shortly after the California Coastal
Commission approved it 2009, clearing the last major regulatory hurdle.
Last year, Stonepeak Infrastructure Partners LLC agreed to pay up to
$150 million for an 18 percent stake in the project.
Poseidon has also proposed a desalination plant of the same size in Huntington Beach, near Los Angeles.
San Diego
began to consider desalination in the early 1990s, when a drought led
it to conclude that it needed a more diverse, reliable water supply. In
2003, it brokered a deal to buy Colorado River water from California's
Imperial Valley in the nation's largest farm-to-city water transfer.
The
agency is also considering desalination plants at Camp Pendleton Marine
Corps Base and Playas de Rosarito, Mexico, just south of the U.S.
border.
Copyright 2012 The Associated Press.
