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Water Authority staff recommends approval of agreement for desalination plant's water

The San Diego County Water Authority announced Wednesday that on Nov. 29 its board of directors will consider approval of a 30-year water purchase agreement with Poseidon Resources, developer of the seawater desalination plant proposed for construction in Carlsbad.

The board held two special public meetings in November in anticipation of the agreement’s final consideration later in the month. Board documents posted for the meeting include a recommendation by Water Authority staff to approve the contract and related agreements. Those documents have been made publicly available on the Water Authority’s website.

The draft water purchase agreement was announced in September after nearly a year of negotiations between Water Authority staff and Poseidon.

An approval of the agreement by the board would provide a financing mechanism for the desalination plant’s construction, essentially the final item needed for construction to commence. Plans for the plant have already been given a green light by state and local permitting agencies.

Preliminary work at the proposed construction site — located on a corner of the Encina Power Station on the edge of Carlsbad’s Agua Hedionda Lagoon — began in 2009. Poseidon began planning for the plant much earlier, though, executing a lease agreement with the owner of the Encina Power Station, NRG Energy, for space at the build site as far back as 2003.

If built according to a schedule in line with a water agreement approval this month, the desalination plant would produce 50 million gallons of drinking water per day starting in 2016. The Water Authority estimates that by 2020, water produced there would account for 7 percent of the total regional supply, or about one-third of all water generated in San Diego County.

Under the draft agreement, the total price for the desalinated water — including related upgrades to the Water Authority’s pipelines and treatment plant — is estimated at $2,041 to $2,290 per acre-foot in 2012 dollars, depending on how much is purchased annually. The Water Authority would have the option to purchase the plant after 10 years of operation under Poseidon, with a reduction in the plant purchase cost to $1 following the full 30-year term of the agreement.

The facility will cost about $691 million to build, plus about $213 million in financing costs on the underlying debt, according to figures provided by Poseidon.

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1 UserComments
paul savage 7:18am November 22, 2012

Equipment from China, Poseidon went BK on a Tampa project, price way out of line, better alternatives available at a better price. Sounds perfect to me, too.