HomeMy WebLinkAbout2000-03-07; Municipal Water District; 468; Develop a Seawater Desalination Project1. (
CARLSBAD ~~IJNICIPAL WATER DISTRICT --AGENDA Blii‘- ’ ’ 8
AB# 468
MTG. 3/07/00
DEPT. CMWD
TITLE. -- Authorization to Negotiate a Letter of intent to
Develop a Seawater Desalination Project
DEPT. HD.
CH-Y .,I?*
RECOMMENDED ACTION:
Adopt Resolution No. 1075 authorizing the Executive Manager, or his
designee, to negotiate a Letter of Intent (LOI) with’poseidon Resources to develop a seawater
desalination project and return to the Board with a LOI for acceptance and approval.
ITEM EXPLANATION:
As part of its efforts to increase water reliability in the City of Carlsbad, the CMWD has begun
investigating the feasibility of developing a seawater desalination project in the city. In pursuit of
this goal, staff has met with Poseidon Resources to discuss the possibilities of developing such a
project. .Poseidon Resources, headquartered in Stanford, Connecticut with regional offices in
Boston, MA, San Diego, CA, and Phoenix, AZ, is a developer and investor in water and
wastewater public-private partnerships in North America.
Over the past decade, the management of Poseidon has worked together to develop, own and
operate some of the largest private infrastructure projects in the water, electric power, and natural
gas industries. As such, Poseidon’s management has collectively developed, financed, and
invested in over $2.5 billion of infrastructure projects.
Poseidon has been responsible for a number of projects in the North American water market,
including the Tampa Bay Water Project, the latest desalination plant in the U.S.; the Cranston
Wastewater Project, the largest privately financed wastewater plant in the U.S.; as well as four
industrial/municipal water supply projects serving Petroleos de Mexico (PEMEX) and its host
communities, representing the largest portfolio of privately-owned water facilities in Mexico.
Poseidon discussed with staff the general steps that they are proposing in developing an ocean
desalination plant in Carlsbad. The ultimate goal for Poseidon is to develop a service agreement
for a long term water supply. The steps are as follows:
a Carlsbad would enter into a Letter of Intent (LOI) with Poseidon to develop plans for the
desalination project in Carlsbad.
l Poseidon would utilize its staff and resources to evaluate and develop plans for producing
water at alternate sites and to evaluate system integration options for delivery of the product
water. Potential sites would be the Encina Power Plant site and the “South Parcel” south of
the Encina Wastewater facility.
l Development of the plans would take approximately 12 months or would be terminated earlier
if the project is deemed not to be cost effective compared to marginal costs of alternate
supplies that might be developed for Carlsbad.
l Upon completion of the plans, Poseidon would develop the terms and conditions for a long term
water supply agreement. At that time, Carlsbad could use the terms and conditions to move into a
bidding phase for securing a long term water supply contract complete with specifications for
quantity, quality, term, reliability, point of delivery and price, which would be open to all qualified
bidders. Or, a contract could be negotiated with Poseidon directly, if allowed by law.
0 A subsequent 12-month term could be included under the LOI to develop alternate arrangements,
specification and /or clarify any project components.
0 During the LOI, Carlsbad’s responsibility would be to meet with Poseidon on the study progress
and to provide information regarding demands, local facilities, local constraints, institutional
arrangements and to sponsor the project before the permitting agencies. The costs to Carlsbad
would consist of staff and legal time only.
The benefits of pursuing the project in this manner is that the risk is placed on Poseidon to develop a
competitive project.
Additionally, the project would meet the City goal to “Implement Citywide programs to assure reliable
sources of water and recycled water.” The CMWD Board, at its April 13, 1999 meeting, received a
presentation on Carlsbad’s Local Water Resources Plan. The Plan recommended that Carlsbad
develop local water resources to augment its imported water supply. At that same April meeting, the
CMWD Board appropriated $900,000 of Water Operations Unreserved Funds (starting at $300,000 per
year starting in 1999-00) for the continued investigation/review of seawater desalination and
groundwater programs in an effort to develop alternate local water supplies.
The Long Beach Water Department and the Municipal Water District of Orange County (MWDOC) are
working with Poseidon Resources to develop desalination projects within those respective agency
service areas. As part of the negotiations with Poseidon, Carlsbad staff will meet with the staff of those
respective agencies to discuss their projects and their relationships with Poseidon Resources. After
review of the projects proposed by these agencies, staff will negotiate terms of a LOI (or possible Board
resolution) that would set out the terms for Poseidon to develop plans for a desalination plant in
Carlsbad.
FISCAL IMPACT:
There is no direct fiscal impact associated with negotiating a Letter of Intent (LOI). Depending on the
result of the negotiations CMWD may be obligated to provide the necessary information regarding the
District water delivery system and to sponsor the Project before the permitting agencies. This obligation
would involve staff time only.
EXHIBITS:
1. Resolution No. 1075 for authorization of Executive Manager to negotiate a Letter of Intent
(LOI) between the Poseidon Resources Corporation and the Carlsbad Municipal Water District.
R:\CMWD\Word\OO Agenda Bills\AB For Poseidon LOI for Desalination Project.doc
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RESOLUTION NO. 1075
A RESOLUTION OF THE BOARD
CARLSBAD MUNICIPAL WATER DISTRICT,
CALIFORNIA
WHEREAS, as part of its efforts to increase
6 CMWD has begun investigating the feasibility of developing seawater desalination project in the
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possibilities of developing such a project; and J
WHEREAS, in pursuit of this goal, staff has me ith Poseidon Resources to discuss the
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10 WHEREAS, this project needs further s and analysis by Poseidon Resources to
,, determine feasibility and to provide the Distri
12 WHEREAS, Poseidon Resources wo ff and resources to evaluate and
,3 develop plans for produci aluate system integration options for
15 WHEREAS, those pot the Encina Power Plant site and the ‘South
Parcel” site so ment Facility; and
Id outline the responsibilities both Poseidon
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Resources and the e order to reach a goal of determining the feasibility of
NOW, THEREFORE ED by the Board of Directors of the Carlsbad
1. That the abov
2. The Board Directors of the lsbad Municipal Water District authorize the
nager, or his designee to negotiate a Letter of Intent (LOI) with Poseidon
the negotiated Letter
01) to the Board for approval.
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oard of Directors of
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PASSED, APPROVED AND ADOPTED at a Special meeting of
the Carlsbad Municipal Water District held on the , 2000 by
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the following vote, to wit:
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(SEW M. WOOD, Secretary
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