HomeMy WebLinkAbout2000-06-27; Municipal Water District; 485; Feasibility Study - Seawater Desalination ProjectAB# s
MTG. 6/27100
DEPT. CMWD
TITLE:
Approval Of Poseidon Resources Request To
Conduct A Feasibility Study For A Seawater
Desalination Project For Carlsbad
CARLSBAD MUNICIPAL WATER DISTRICI - AGEN
CITY MGR.
*I
RECOMMENDED ACTION:
Adopt Resolution No. 1093 authorizing Poseidon Resources, Inc. to proceed with
a feasibility study for a seawater desalination project for Carlsbad.
ITEM EXPLANATION
At its meeting of June 13, 2000, the Board of Directors of the Carlsbad Municipal Water District
reviewed the staff report and the proposed resolution authorizing Poseidon Resources Corporation,
to conduct a feasibility study. At that meeting, Poseidon Resources corporation, Inc. suggested
changes to the resolution and the matter was continued. Both the District and Poseidon Resources
have now agreed to the changes, which clarify the following:
. CMWD Board of Directors retains sole discretion whether or not a seawater desalination project
feasible for Carlsbad
. CMWD Board of Directors retains sole discretion to meet and confer in good faith the terms
conditions of a long-term water supply agreement with Poseidon Resources
n CMWD Board of Directors could move into a bidding phase for securing a long-term water supply
contract if it does not reach an agreement with Poseidon
n Poseidon shall conduct a feasibility study within 12 months
n The resolution shall remain in full force and effect for 12 months after which time it shall
automatically repealed and of no further force and effect unless extended by another resolution of
Board of Directors
At its March 7, 2000 Board of Directors meeting, staff was instructed to prepare a report outlining the
potential benefits and impediments to developing a seawater desalination facility in Carlsbad and to
provide a recommendation on a commitment for pursuing a Feasibility Report proposed by the
Poseidon Resources Corporation. That staff report is attached to this agenda as Exhibit 2. The purpose
of this staff report was to identify the issues known at this time in order to put the potential for seawater
desalination into perspective.
In summary, the report states that while there are numerous beneficial aspects to developing a
seawater desalination project, there are many serious and critical issues that must be addressed and
resolved prior to any seawater desalination project.
Some issues revolve around the numerous permitting and environmental hurdles to overcome in the
process of developing a seawater desalination facility. Some of the more critical agency approvals needed are the California Coastal Commission, the U.S. Environmental Protection Agency, the
California Department of Fish and Game, State Department of Water Resources and the State
Regional Water Quality Control Board.
There are also issues affecting the City of Carlsbad and some of those are: the possible redevelopment (and possible relocation) of the Encina power plant; the continued relationship with the County Water
Authority; how a desalination facility would affect a possible contractual agreement with the Authority;
how a contractual arrangement would be negotiated with Poseidon if the project was shown to be
feasible; and whether or not Carlsbad would partner with the Water Authority and/or neighboring water entities.
Page 2 of Agenda Bill No. WY
Again, these are issues that must be addressed and resolved prior to the realization of any seawater
desalination project that is shown feasible.
Should Poseidon proceed with their feasibility study, they have discussed the general
steps that they are proposing in developing a seawater desalination plant in Carlsbad.
The ultimate goal for Poseidon is to develop a service agreement, or purchase contract,
for a long-term water supply. The steps are as follows:
Carlsbad would, by resolution, agree to allow Poseidon to develop a feasibility report for a
desalination project in Carlsbad.
0 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. The
City of Carlsbad does not own or control either site.
0 Development of the plans would take up to 12 months or would be terminated earlier if the project
were deemed not to be cost effective compared to marginal costs of alternate supplies that might be
developed for Carlsbad.
Upon completion of the plans, Poseidon would develop the terms and conditions for a long-term water
:upply agreement. At that time, if the agreement is generally acceptable to Carlsbad, Carlsbad could
negotiate the terms and conditions with Poseidon for securing a long term water supply contract complete
with specifications for quantity, quality, term, reliability, point of delivery and price. Alternatively, if the
agreement is not acceptable, or if required by law, a contract could be bid to all qualified bidders
negotiated with Poseidon directly, if allowed by law.
A subsequent 12-month term could be included to develop alternate arrangements, specification and
Yor clarify any project components.
l During the study, Carlsbad’s responsibility would be to meet with Poseidon on the study’s progress
and to provide information regarding demands, local facilities, local constraints, and institutional
arrangements and to sponsor the project before the permitting agencies. The costs to Carlsbad would
consist of staff and legal time only.
Therefore, staffs recommendation, based on the information contained in the staff report, is to have
Poseidon proceed with a feasibility study for a Carlsbad seawater desalination facility, with the realization
that these many issues must be addressed and resolved prior to any commitment to proceed with a
seawater desalination project. It is further recommended that this be accomplished through a Carlsbad
Municipal Water District Board resolution rather than the previously referenced Letter of Intent (LOI). The
benefit of pursuing the project in this manner is that the risk is placed on Poseidon to develop a
competitive project.
Because of the recent issues facing both the Metropolitan Water District and the San Diego County Water
Authority and the importance to Carlsbad to have and maintain a reliable water supply, it is an additional staff recommendation that the Board consider setting a date to conduct a strategic water-planning
workshop for Carlsbad
Page 3 of Agenda Bill No. 44.6
FISCAL IMPACT:
There is no direct fiscal impact associated with proceeding with a feasibility study at this time. However,
staff will be required 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
estimated to be approximately $50,000.
EXHIBIT:
1. Carlsbad Municipal Water District Resolution No. 1093
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RESOLUTION NO. 1093
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
CARLSBAD MUNICIPAL WATER DISTRICT, CARLSBAD,
CALIFORNIA AUTHORIZING THE POSEIDON RESOURCES
CORPORATION TO PROCEED WITH A STUDY TO EXPLORE
THE FEASIBILITY OF A SEAWATER DESALINATION PROJECT
IN CARLSBAD
WHEREAS, 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; and
WHEREAS, in pursuit of this goal, staff has met with Poseidon Resources
to discuss the possibilities of developing such a project; and
WHEREAS, Poseidon’s intent is to develop a seawater desalination
project in the Carlsbad region and to provide potable water on a wholesale basis to the
CMWD under a long term agreement with terms and conditions to be determined; and
WHEREAS, at the direction of the Board, staff has prepared a report
outlining the potential benefits and impediments to developing a seawater desalination
facility in Carlsbad and provided a recommendation on a commitment for determining
feasibility as proposed by the Poseidon Resources Corporation; and
WHEREAS, this project does need further study and analysis by Poseidon
Resources to determine feasibility and to provide the District with a detailed proposal
and the District shall determine in its sole discretion whether or not a seawater
desalination project is feasible for Carlsbad; and
WHEREAS, if determined by the District in its sole discretion to be
feasible for Carlsbad, the District would meet and confer to negotiate in good faith the
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terms and conditions of a long-term water supply agreement with Poseidon directly, if
allowed by law; and
WHEREAS, after development of terms and conditions for such long-term
water supply agreement Carlsbad could, if it does not reach an agreement with
Poseidon, move into a bidding phase for securing a long-term water supply contract;
and
WHEREAS, a contract would be complete with specifications for quantity,
quality, term, reliability, point of delivery and price; and
WHEREAS, because of the recent issues facing both the Metropolitan
Water District and the San Diego County Water Authority and the importance to
Carlsbad to have and maintain a reliable water supply, the Board shall consider setting
a date to conduct a strategic water-planning workshop for Carlsbad
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Carlsbad Municipal Water District as follows:
1. That the above recitals are true and correct.
2. The Board of Directors of the Carlsbad Municipal Water District
authorizes the Poseidon Resources to conduct a feasibility study and prepare a
detailed proposal for developing a seawater desalination project. The study and
proposal shall be prepared within twelve (12) months from the date of this resolution.
The responsibilities of Poseidon and CMWD are as follows:
l Poseidon Resources
o Evaluate the feasibility, provide the evaluation and development
of plans within 12 months from the date of this resolution (the
effort would be terminated earlier if the project is
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deemed infeasible compared to the marginal costs of alternate
supplies that might be developed for CMWD);
o Present, within 12 months of the date of this resolution, a
detailed proposal that will include, among other things, the
quantity, quality, reliability and pricing requirements of CMWD;
o Utilize its staff and resources to evaluate and develop plans for
producing water at alternate sites, those potential sites would
be the Encina Power Plant site and the “South Parcel” site
south of the Encina Wastewater Treatment Facility;
o Evaluate Carlsbad’s water system integration options for
delivery of the product water, including local storage options
within the City of Carlsbad, as well as direct delivery into the
San Diego County Water Authority conveyance system;
o Pay all costs associated with the evaluation of seawater
desalination feasibility, except internal costs of the CMWD.
l CMWD
o Provide reasonable information, as necessary, to Poseidon
during the development period;
o Sponsor the project before the permitting agencies, as
necessary.
3. The Board of Directors set a date to conduct a workshop to discuss
Metropolitan Water District and San Diego County water Authority issues as they relate
to strategic water resources planning for Carlsbad.
4. This resolution shall remain in full force and effect for 12 months from
the date of its adoption after which time it shall be automatically repealed and of no
further force and effect unless extended by another resolution of the Board of Directors
of the Carlsbad Municipal Water District.
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PASSED, APPROVED AND ADOPTED at a regular meeting of the Board
of Directors of the Carlsbad Municipal Water District held on the 18th day of
July 2000 by the following roll call vote, to wit:
AYES: Board Members Lewis, Hall, Finnila, Nygaard and Kulchin
NOES: None
ABSENT: None
Al-T-EST:
(SEAL)
STAFF REPORT ON
POSEIDON RESOURCES’
PROPOSAL TO DETERMINE
FEASIBILITY OF SEAWATER
DESALINATION FOR
CARLSBAD
July 14,200O
EXHIBIT 2
STAFF REPORT ON POSEIDON RESOURCES’
PROPOSAL TO REVIEW FEASIBILITY OF SEAWATER
DESALINATION FOR CARLSBAD
TABLE OF CONTENTS
1. Introduction . .----------------------. 2
2. Potential Benefits of a Desalination Project .-----. 2
3. Potential Impediments of a Desalination Project
A) Potential Environmental Impacts and Coastal Act Issues .-..3
B) Desalination Plant Permitting Process - Other Agencies ..- 4
C) Other Regulatory Authorities . .-------. 4
D) City of Carlsbad Issues
1) Planning and Redevelopment Issues . .---. 5
2) Financing Issues . .-------.6
E) CMWD Issues
1) The San Diego County Water Authority ..--7
2) Carlsbad’s Recycled Water Program .---. 8
3) CMWD’ s Water System . .-----. 10
4) Potential Contractual Issues .----LO
5) Potential CMWD Customer Issues.....---..10
4. Summary and Recommendations .-------. 10
July 14,200O
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Staff Report on Poseidon Resources’ Proposal to Review
Feasibility of Seawater Desalination for Carlsbad
1. Introduction
At it’s March 7,200O Board meeting, the Carlsbad Municipal Water District Board
directed staff to prepare a report on Poseidon Resources’ proposal to do a feasibility
&udy on seawater desalination for Carlsbad.
Previously, Poseidon Resources had approached staff with a proposal to perform a
feasibility study on seawater desalination. This proposal was in the form of a request for
the Carlsbad Municipal Water District to enter into a Letter of Intent (LOI). This LOI was
proposed by Poseidon in order for Carlsbad to formally indicate an interest in the study,
allow staff time to assist Poseidon with information on CMWD’ s water distribution
system, and for CMWD to sponsor the project to permitting agencies. Carlsbad’ s
sponsoring of the project would help Poseidon determine the time, effort and costs
needed to secure the many various permits required for a desalination facility.
As part of the preparation of this report, city staff members met to determine what affect
this proposed project would have on the city and what hurdles would have to be
overcome and what impediments exist that may prevent this project from becoming a
reality.
Staff representing Finance, Planning, Risk Management and Housing and Redevelopment
offered their assistance in developing a list of benefits and potential conflict areas of this
proposed project.
2. Potential Benefits of a Desalination Project
There are many benefits to a successful desalination project for Carlsbad. First,
Carlsbad’ s present water supply is 100% dependent on imported water. This water is
transported from both northern California and the Colorado River, although most of our
supply comes fi-om the Colorado River. These supplies are delivered fi-om the
Metropolitan Water District to the San Diego County Water Authority, both water
wholesalers, and then to the Carlsbad Municipal Water District, a water retailer.
Carlsbad currently requires approximately 19,000 acre-feet of water annually to serve its
customers. About 17,000 acre-feet is purchased from the San Diego County Water
Authority as Carlsbad’ s potable water supply. The remaining 2,000 acre-feet of water is
recycled water used for outdoor irrigation throughout Carlsbad. Should seawater
desalination prove to be feasible, this additional water supply, during a prolonged
drought, could minimize reductions in potable water supplies from the San Diego County
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Water Authority. This would provide additional insurance to residents and industry in the
way of saved jobs and industrial/retail revenues.
Because this water supply is imported from outside the county, its reliability is less than
desirable due to the potential of droughts that would affect the supply and also
emergencies, such as earthquakes, that could sever an aqueduct and interrupt the water
supply for days, even months. Because of the vagaries of this supply, any project that
increases the reliability of Carlsbad’ s water supply is a definite benefit. Desalination of
seawater would provide this benefit.
A second benefit is the improvement of water quality. Because the desalination of
seawater removes most of the salts in the water, the water quality would be improved
compared to the imported water presently received by Carlsbad. This water, presently
received from the Colorado River, is high in salts, or total dissolved solids (TDS). Again,
because most of our water comes from the Colorado River, the County Water Authority
has requested that the Metropolitan Water District provide more of its water to San Diego
County from the State Water Project (northern California water) which is less in TDS, in
order to improve San Diego County’s imported water quality.
3. Potential Impediments of a Desalination Project
A) Potential Environmental Impacts and Coastal Act Issues
There are many potential impediments to developing a seawater desalination
facility in Carlsbad. Some of these impediments are the potential environmental
impacts caused by the proposed project and also some Coastal Act issues.
Development in the coastal zone must conform to the policies and standards of the
California Coastal Act and the Commission-certified Local Coastal Program
(LCP) of the government with jurisdiction in the area of the proposed
development. The Coastal Commission reviews projects on a case-by-case basis
and considers the environmental benefits and coastal zone impacts of all projects.
The following types of potential coastal zone impacts may have to be considered
and addressed for this proposed desalination plant:
1) Construction
l Impacts/Related Policies
l Potential Mitigation Measures
2) Energy Use
l Impacts/Related Policies
l Cogeneration
l Other Options for Saving Energy
l Potential Mitigation Measures
3) Air Quality
l Impacts/Related Policies
l Potential Mitigation Measures
4) Marine Environment
l Related Policies
l Constituents of Waste Discharges from Desalination Plants
l Marine Resource Impacts from Desalination Waste Discharges
l Waste Discharge Methods
l Marine Resources Impacts from Desalination Plant Intake
l Pre-Operational Monitoring and Baseline Information on Marine
Resources
l Post-Operational Monitoring of Marine Resources
l Potential Mitigation Measures to Reduce Marine Resource Impacts
5) Increased Development
l Potential Growth-Inducing Impacts of Providing Desalinated
Water/Related Policies
l Potential Mitigation Measures to Minimize Growth-Inducing Impacts
6) Other Coastal Zone Issues
l Impacts (geologic hazards, navigation, cumulative effects, etc.)
l Potential Mitigation Measures to Minimize the Impacts
B) Desalination Plant Permittina Process - Other Agencies
If Poseidon (or the City of Carlsbad) intends to construct a desalination plant, they
(we) would also be required to obtain the following permits or other approvals
from agencies other than the Coastal Commission:
1) A coastal development permit pursuant to Section 30600(d) of the Coastal
Act for any portion of the project that is not within the Coastal
Commission’s retained permit jurisdiction is required. Prior to obtaining a
local permit, the applicant will have to complete a California
Environmentai Quality Act (CEQA) Document such as an Environmental
Impact Report or a Negative Declaration.
2) A National Pollutant Discharge Elimination System (NPDES) permit to
discharge seawater desalination wastes (e.g., brine) issued by the State
Regional Water Quality Control Board (RWQCB) with jurisdiction in the
area of the proposed project. (If EWA or Encina Power Plant discharge
existingpermit is used, it may only have to be amended.)
3) Possible Permits from the U.S. Army Corps of Engineers under Section 10
of the Rivers and Harbors Act of 1899 (33 U.S.C. Section 403) and Section
404 of the Clean Water Act (33 U.S.C. Section 1344).
C) Other Regulatory Authorities
Agencies other than the Coastal Commission that may have regulatory authority
over this desalination facility include the following:
1) Air Quality Management District
2) California Department of Fish and Game
3) California Department of Health Services, Office of Drinking Water and
Toxic Substances Control Division
4) California Energy Commission
5) County Departments of Environmental Health
6) National Marine Fisheries Service
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7) State Department of Water Resources
8) State Regional Water Quality Control Board
9) State Water Resources Control Board
10) Environmental Protection Agency
11) Fish and Wildlife Service
D) Citv of Carlsbad Issues
There are several issues that would affect the City of Carlsbad at various levels
and in several city departments. Some of these issues are as follows:
1) Planning and Redevelopment Issues
There are two alternate sites that a seawater desalination facility could be
located. One site is the Encina Power Plant site and the other site is
adjacent to, and south of, the existing Encina Wastewater Authority
Treatment Facility. A very significant benefit of both sites is th$ California
Regional Water Quality Control Board Discharge Permits that both
facilities possess. Additionally, the close physical proximity of each site to
a seawater supply and a brine discharge, both required by any seawater
desalination facility, is another equally important benefit. Another benefit
of the power plant site is its availability and proximity as a power source
for the desalination facility. However, this is not a major issue since
reverse osmosis, for example, uses only electrical power, which is easily
transmitted.
The city, through the Housing and Redevelopment Department, is
anticipating the adoption of the South Carlsbad Coastal Redevelopment
Plan Project Area to reduce and eliminate blight. This proposed
redevelopment project is located in the extreme western area of the city
and extends from the Encina power plant and the Aqua Hedionda lagoon
along Carlsbad Boulevard to the southern city limits. One of the
achievements expected from this redevelopment plan is the redevelopment
of the Encina power generating facility to a smaller, more efficient power
generating plant. This power plant redevelopment plan would present
some difficulties in locating a seawater desalination facility at this present
site. There is also a preference for the power generating facility to be
relocated east of the present site to an area east of the railroad tracks and
west of the I-5 freeway. However, this preferred power generating site
may also be satisfactory for a seawater desalination facility, if there is
sufficient land available. It remains to be seen, however, if this site would
be compatible with the requirements of a seawater desalination facility,
such as close proximity to seawater supply and brine discharge. (These
two factors are more important than proximity to power source.)
Additionally, the power plant’ s present Regional Board discharge permit
is quite valuable and may have to be reissued if the power plant was
relocated.
Because of the potential power plant relocation issue, a preferred site for a
seawater desalination facility would appear to be the site south of the
Encina Wastewater Authority Treatment Facility. It remains to be seen if
the capacity is available for a water supply and brine discharge at this
location.
2) Financing Issues
Since Poseidon is offering to pay for the feasibility study on seawater
desalination for Carlsbad, there is no imrnediate requirement for funding.
However, if a seawater desalination facility is feasible, it remains to be
seen whether Carlsbad will be asked to participate by assisting Poseidon in
some form of financing. The assistance requested may take the form of
Private Activity bonds and/or a low interest loan or grant from the state or
Federal Government. Passage of the recent Proposition 13 Water Bond
allows for funding for water supply projects and this may be a possible
source for some funding. Alternately, private sources for funding may be
available.
Private activity bonds are debt securities that are exempt from state and
’ federal taxes under IRS regulations. States are provided a certain amount
of tax-exemptions by the federal government, based on population, to be
available for certain private sector activities. If this financing method was
chosen, it is likely Poseidon would request Carlsbad to act as the conduit
for the issuance of these bonds. These would be similar to the Industrial
Development bonds issued for Asymtek and Aalta several years ago.
There are numerous regulations regarding the issuance of Private Activity
bonds. For the Carlsbad desalination project, the funds may be available
under a public use qualification that would be satisfied by the development
of the project by Poseidon. In this case, Poseidon would be the obligor on
the bonds to maturity with no recourse to the Carlsbad Municipal Water
District nor the City. Presently, Poseidon is pursuing an allocation of
private activity bonds for its activities in California.
In order to issue any kind of debt, it is likely that Poseidon will need to
enter into long-term contracts with Carlsbad and other water agencies for
the purchase of water. While the Poseidon feasibility study does not
commit Carlsbad to anything at this point, it would be anticipated that we
(along with any other agencies) would need to commit to the purchase of
the water in the future if the project was to move forward.
If such a financial arrangement is requested, Carlsbad would have to
consider whether or not to participate. If Carlsbad does participate in
assisting with a financial arrangement through sponsorship of tax exempt
bonds, low interest government loans, or grants, thought should be given
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to whether or not Carlsbad should, therefore, participate’in a percentage of
the ownership of the desalination facility.
E) CMWD Issues
Should the Carlsbad Municipal Water District Board allow Poseidon to proceed
with its feasibility study on seawater desalination and if the study shows feasibility,
a number of critical issues would need to be addressed. Some of these issues are as
follows:
1) The San Dieno Countv Water Authority
l The first issue deals with the question of our continuing relationship
with the Water Authority. Do we rely on desalinated water for 100%
of our water supply and abandon the Water Authority as a water
supplier? If we do eliminate the Water Authority as a water provider,
how does the Water Authority recover Carlsbad’ s share of the existing
and future costs related to the Water Authority’s Capital Program?
Would this be a reason for the Water Authority to become partner in
the desalination project if proven feasible? If Carlsbad continues to pay
for its share of the Water Authority’s CIP, could the seawater
desalination project really be cost effective?
l The second issue deals with how much water will Carlsbad be
purchasing from the Poseidon’s desalination facility. Should we
purchase 100% if economically feasible, or continue to purchase some
water from the Water Authority as insurance and blend it with the
supply from the desalination facility? How would this affect our water
distribution operations? If Carlsbad was to purchase 100% of its
potable water supply from Poseidon, could Carlsbad re-establish
connections to its conventional current source (CWA) of potable water
supply in an emergency?
l Another issue concerns the Water Authority’s possible revisions to its
rate structure including “take or pay” contracts for future water
purchases. ‘Take or pay” contracts typically require that the purchaser
of water pay for the contracted amount, whether or not the water is
actually taken by the purchaser.
For example, if Carlsbad enters into a “take or pay” contract for 17,000
acre feet of water per year and only takes 15,000 acre feet in any one
year, Carlsbad would still have to pay for 17,000 acre feet, as per the
contract. Also, if Carlsbad needed more than the contracted 17,000
acre feet of water in any one year, Carlsbad would have to pay a
surcharge for the amount over the contracted 17,000 acre feet.
How would Carlsbad be affected if we limit future water purchases, or
even eliminate all purchases, from the Water Authority? If “take or pay
“ contracts are required from the Water Authority prior to construction
of any seawater desalination facility, how would that affect Carlsbad’ s
ability to purchase water from that desalination facility? As a result of
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this possible rate structure change by the Water Authority, would the
resultant pricing structure be economical to Carlsbad?
l Would the Water Authority be willing to partner with Carlsbad, if this
project is deemed viable? Would Carlsbad be willing to partner with
other neighboring water entities or willing to wholesale them water
from the desalination facility? Would Carlsbad be willing to partner
with Poseidon if the feasibility study is positive?
2) Carlsbad’ s Recycled Water Program
Another issue for Carlsbad is the question of proceeding with Phase 2 of
its Recycled Water Program. Would, or should, Carlsbad, pursue this Phase 2, at an estimated $30 million cost? At first glance, the answer
might be no. One would assume that the costs of a recycled water
program would be more expensive than a potable system because of the
need for a completely separate piping system. However, when analyzing
this issue closer, the answer is yes, Carlsbad should continue its recycled
water program, and here is why:
l First, there is no guarantee that the desalination study will lead to a
viable project.
l Second, even if the project is deemed feasible, the time involved in
its development will be on the order of 5 to 10 years. While 5 to 10
years seems long, previous information given in this report
pertaining environmental reviews and permitting would take up a
bulk of the time. It would not be prudent to abandon our recycled
water efforts when a more reliable water supply is 5 to 10 years in
the future. We have experienced a drought in the early 90’s and
recycled water was critical to many of the District’s customers.
l An indirect benefit to continued water recycling is the potential for
avoided costs regarding wastewater treatment capacity. Presently the
Encina Wastewater Authority is preparing to construct flow
equalization basins to delay and perhaps avoid construction of a larger ocean outfall. Phase 2 of Carlsbad’ s Recycled Treatment
Facility can provide additional capacity for peak wet weather flows
and possibly avoid the construction of more than one flow
equalization facility. The Carlsbad Recycled Water Treatment
Facility could provide 1.5 million gallons of flow equalization
capacity. This could postpone the expansion of the EWA flow
equalization facilities to beyond 2010. Based on cost estimates, the
value of using the Carlsbad Recycled Water Treatment Facility (i.e.
1.5 million gallons of flow equalization) for peak flow management
would be $1, 100,000.
a Finally, the costs for recycled water potentially are less expensive than seawater desalination. A comparison of costs are as follows:
a. Costs of recvcled water
Present costs for producing and delivering recycled water to
the retail customer is approximately $850 to $900 per acre-
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3) CMWD’ s Water System
foot. These costs include operational costs of the separate
recycled water distribution system. However, because of the
rebate program Carlsbad presently enjoys with the Water
Authority and MWD, the subsidized costs to the customer is
reduced to $700 per acre-foot. It is anticipated that Phase 2 of
the recycled water program will result in a cost of about $900
per acre foot and with the extended rebate program recently
secured by Car&bad, it is anticipated that the subsidized costs
to the customer will remain at approximately $700 per acre
foot. Metropolitan’ s extended rebate for Phase 2 would revert back to the original rebate program for Phase 1 should
Carlsbad not pursue construction of Phase 2.
b. Potential Costs of Seawater Desalination
The costs of seawater desalination, under a best-case scenario,
may be $700 per acre-foot. Poseidon has recently proposed
and contracted to produce desalinated seawater for the Tampa
Bay Water Authority in Florida. Their contract calls for a
price of $700 per acre-foot. However, the conditions under
which they will produce this water differ greatly from the
conditions here in Southern California. Some of these
conditions are; a warmer water supply, a cheaper power cost
and a water supply lower in salts because the water will be
taken from a bay rather than the ocean
Should Poseidon, in a best-case scenario, be able to produce
desalinated seawater at $700 per acre-foot, this cost would
only reflect the cost to produce the water. Added costs would
be incurred to deliver the water to the customer. These costs
would add about $185 to the previously mentioned $700 per
acre cost to produce and does not include whatever costs that
would be incurred to pump the water from sea level to a higher point in our water distribution system.
As a result, and even considering the added expense to the
recycled water program of an separate piping distribution
system, costs for a best case scenario seawater desalination
program would be the same as, or more expensive than,
Carlsbad’ s recycled water program.
Should the seawater desalination project prove feasible, several operational issues pertaining to our water distribution system will need
to be addressed. Questions as to the possible water supply mixture arise
if the sources are to be the Water Authority and the desalination project.
Will the quality differences create any operational difficulties and how
will the system operate with two sources of supply entering at different
locations? Will Carlsbad peak off of the desalination system or the CWA
system? (It is not desirable to peak off of either system. Solutions may
involve revisions to present reservoir operations.)
4) Potential Contractual Issues
Should the seawater desalination project prove feasible, what will be the
contractual obligations, not only for Carlsbad but also Poseidon
Resources? What will be the issues besides water costs, water quality
and water reliability? What percentage of Carlsbad’ s water needs should
be satisfied by the seawater desalination facility?
5 .) Potential CMWD Customer Issues
Should the seawater desalination project prove feasible, how would the
CMWD customer be affected? Would the water rates increase
and would a possible increase be justified by improved water
quality, water supply reliability and stability in future water costs? Will
the CMWD customer accept the new source of potable water supply or
prefer to continue with the present source of imported water, accepting the present reliability, and quality issues?
4. Summary and Recommendations
One can see that there are numerous beneficial aspects to developing seawater
desalination project, but also many serious and critical issues that must be addressed
and resolved before Carlsbad might enjoy the fruits of a cost effective, reliable,
drought proof, water supply.
The purpose of this report was not to attempt to answer the many questions presented
or solve any of the issues presented. The purpose was to identify most of the issues
known at this time in order to put the potential for seawater desalination into
perspective.
There are numerous permitting and environmental hurdles to overcome in the
process of developing a seawater desalination facility. Some of the more critical
agency approvals needed are the California Coastal Commission, the U.S.
Environmental Protection Agency, the California Department of Fish and Game,
State Department of Water Resources and the State Regional Water Quality Control
Board.
There are also numerous issues affecting the City of Carlsbad and some of those are;
the possible redevelopment (and possible relocation) of the Encina power plant, the
continued relationship with the County Water Authority and how a desalination
facility would affect a possible contractual agreement with the Authority, how a
contractual arrangement would be negotiated with Poseidon if the project was shown
to be feasible and would Carlsbad partner with the Water Authority and/or
neighboring water entities.
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Again, these are issues that must be addressed and resolved prior to the realization of
any seawater desalination project that is shown feasible.
Poseidon is willing, at this time, to complete the feasibility study at their expense.
Once completed, and if proven feasible, they would expect Carlsbad’ s commitment
to purchase. Carlsbad would have the option of proceeding with Poseidon at that
time and enter into an agreement or, using the terms of an agreement, proceed to 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 bidders.
Another approach would be to take the pro-active route and issue an RPP to any and
all to provide water to Carlsbad on a “Build, Own and Operate” (BOO) basis. This
will give other consortia an opportunity provide their own approaches. The
feasibility study can be part of the contract. This approach would give Carlsbad a
more competitive procedure and competitive pricing. CMWD, however, would have
to bear the cost of preparing the RFP and must have decided apriori that a
desalination plant is required for the city’ s future.
Therefore, the recommendation based on the information contained in this report is
to have Poseidon proceed with a feasibility study for a Carlsbad seawater
desalination facility. It is further recommended that this be accomplished through a
Carlsbad Municipal Water District Board resolution rather than the previously referenced Letter of Intent (LOI).
Respectfully submitted,
Robert Greaney
Deputy Public Works Director
.C:Wy Correspondence\Correspondence ‘OOVoseidon ResourcesWpat On Poseidon Resowees (Revised as per CM Suggestions).doc
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