Huge California desalination plant faces key test

SAN DIEGO (AP) — An effort to build the Western Hemisphere's largest seawater desalination plant faced a key test Thursday, as San Diego's regional water agency considered whether to buy all its output despite criticism that cheaper alternatives could be overlooked.

Poseidon Resources LLC needs the 30-year contract to move ahead with plans to sell bonds to pay for more than 80 percent of the $984 million project.

The plant in Carlsbad would produce 50 million gallons of highly purified drinking water a day, enough to supply about 8 percent of the region in 2020.

The San Diego County Water Authority's decision on whether to buy the water from Poseidon is being closely watched, especially in California, where the plant is the furthest along among about two dozen proposals.

Desalination has helped quench demand in Australia, Saudi Arabia and other countries lacking fresh water, but it has been slow to catch on in the U.S.

The San Diego agency would pay $2,042 to $2,290 for an acre-foot of water, more than twice what it pays to bring water from Northern California and the Colorado River via hundreds of miles of aqueducts.

Desalination backers say the premium is well worth the protection it provides against threats to imported water posed by drought. The region imports about 80 percent of its water.

"It's absolutely critical to our region's water reliability and economic stability. It's another historic step toward making us less vulnerable to drought and the severe competition for water that we import," San Diego Mayor Jerry Sanders told the board.

The agency, which acts as a wholesaler to 24 cities and agencies including the city of San Diego, struck a tentative deal in September with Poseidon, a Stamford, Conn.-based company that also wants to build a huge desalination plant in Huntington Beach, south of Los Angeles.

Since then, skeptics have questioned the cost.

Pacific Institute, an Oakland-based group that studies environmental issues, said in a report that San Diego should consider lowering its minimum annual purchase of 48,000 acre-feet, or enough to supply about 96,000 homes. It said large plants built in Australia are unused in response to lower demand and cheaper alternatives.

Likewise, a big plant in Tampa, Fla., that was planned during boom times in the 1990s was completed in 2007 after long delays and is operating well below capacity.

The San Diego agency estimates that the average household bill will increase $5 to $7 a month when deliveries begin in 2016. It figures the cost is comparable to other new, local sources of drinking water.

Poseidon proposed the plant in 1998 and began negotiating with potential customers shortly after the California Coastal Commission approved it in 2009, clearing the last major regulatory hurdle.

The company overcame challenges from environmentalists concerned about the plant's massive electricity needs and harm to fish and other wildlife from intake filters and brine that is dumped back into the ocean.

The city of San Diego, which holds 40 percent of voting power on the water board, irked some other cities with a proposal that would shift more costs to smaller agencies that don't have their own water treatment facilities. Valley Center Municipal Water District, which serves avocado growers north of San Diego, has said it might reluctantly withdraw its support.

"It would be a sad, sad irony if the San Diego region lost this critical and historic project, not by overly burdensome regulations, not by litigation, and not by the unflinching environmental opposition, but by the overplayed hand of one of its own water agencies," Gary Arant, Valley Center's general manager, wrote in an opinion article in the U-T San Diego newspaper.

Water authority staff recommended approving the contract and deciding later how to share costs. Marco Gonzalez, an environmental lawyer who opposes the project, predicted a contentious fight.

"How is that cost going to be allocated? We don't know," he told the board. "It's not fair to the ratepayers, it's not fair to your constituents, it's not fair to your board to make this decision ahead of time."

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. The agency is also considering giant desalination plants at Camp Pendleton Marine Corps Base and Playas de Rosarito, Mexico, just south of the U.S. border.