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Carlsbad desalination financing closes

SAN DIEGO -- Project financing has closed on a Carlsbad desalination plant to construct the largest U.S. facility to make drinking water from the sea, capable of producing about 50 million gallons of potable water a day.

Financing closed last week for the almost $1 billion Poseidon desalination and pipeline project, that includes $734 million in tax-exempt bonds as well as private equity from Stonepeak Infrastructure Partners, meaning grading and initial construction may begin this month, the San Diego County Water Authority said.

“Closing the financing on an approximately $1 billion project is no small feat,” said Thomas Wornham, chairman of the water authority’s board. “This is a major milestone in the development of this historic project.”

Dickstein Shapiro LLP of Washington D.C. led the debt and equity financing for the Poseidon project, which is structured as a public-private partnership and included 60 parties and a water purchase agreement.

Bonds that sold last month at a 4.78 percent interest rate are helping fund the project.

Poseidon Resources Corp., based in Stamford, Conn., is the only company in the U.S. developing large-scale seawater desalination plants.

With rising demand for fresh water sources, the plant will be a key component of San Diego County water supplies and pave the way “for future desalination projects in California and beyond,” Poseidon Chief Executive Officer Carlos Riva said.

The San Diego water agency says the average household bill may rise about $6 a month when the desalination plant near Agua Hedionda lagoon, which is energy-intensive making water filtered from the sea, is completed in 2016.

The plant is expected to supply enough water using reverse- osmosis technology for about 7 percent of the region.

IDE Technologies Ltd. of Israel will design the water-treatment system and run the facility for Poseidon.

The project include 10 miles of pipeline to the water authority’s aqueduct in San Marcos, with the plant located adjacent to the NRG (NYSE: NRG) Encina power station.

A Kiewit Infrastructure West Co. and J.F. Shea Construction venture will design and build the plant and pipeline.

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