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Deal to Create Water Desalination Plant Leaves Ratepayers Holding the Bag

Deal to Create Water Desalination Plant Leaves Ratepayers Holding the Bag
Developer, Water Authority Pushing for Approval Before Full Costs to Local Agencies are Known

The San Diego County Water Authority is pushing its members to approve a deal by the end of the month to buy expensive water from a proposed desalination plant in Carlsbad, despite unresolved questions from an impartial ratepayers’ advisory board to San Diego Mayor Jerry Sanders.

The false urgency to approve the contract is being manipulated by Poseidon Resources, the developer that wants to build the $1 billion project using taxpayer-backed bond financing.

Multiple issues have now finally come to light. The first concerns the underlying reason for rushing the water purchase agreement: last week Poseidon admitted their lease is expiring around 11/29, despite renewing this lease several times in the past without problem. Several concerned board members asked to see copies of the lease at a recent board meeting, but Poseidon claimed it was “proprietary information.”

“This is nothing more than a scare tactic to pressure the agency into agreeing to this very poor deal,” said Don Billings, Independent Rates Oversight Committee member.

The ratepayer watchdog group is concerned because water from the plant, which would be the nation’s largest facility for converting sea water to drinking water, will cost three times the amount currently charged by the Metropolitan Water District, a Los Angeles-based agency that supplies about half of San Diego County’s water. Furthermore, the final cost of desalination to ratepayers won’t be known until the Water Authority completes a cost-of-service study next year to sort of all the price variables that will be borne by the 24 agencies that buy water from the authority.

The second concern is that Poseidon claims their contracts with the builders of the plant and operation engineers will expire on 12/31, which would force Poseidon to have to renegotiate those contracts, possibly increasing costs and incurring more expense for the already delayed project.

“It seems irresponsible to allow a private company to force public water agencies into a decision before they are ready, with significant questions still remaining, and substantial rate payer dollars at risk,” said Belinda Smith, a Surfrider activist. “We have been fighting this project for a long time due to its significant environmental impacts, but now these gross financial indiscretions really stand to jeopardize more environmentally and fiscally responsible options, such as Indirect Potable Reuse (IPR).”

The effort to rush the deal through without further scrutiny became apparent last week, when a Water Authority member falsely claimed that the concerns of the San Diego ratepayer oversight committee had been addressed.

“I’m frankly astonished to hear this, because it’s categorically untrue,” said Don Billings. We are very concerned that recent developments around this public-private partnership do not serve the people of San Diego, and that rushing into this 30-year take-or-pay contract is proving to be very problematic,” he said.

“Quite frankly, the project proponents have failed to make their case,” he continued. “From my perspective it is unconscionable to burden ratepayers for 30 years without first conducting the most thorough due diligence.”

“There has been a pattern of deceit and a lack of transparency on this project from the beginning,” said Julia Chunn-Heer, Campaign Coordinator for Surfrider. “We demand that Poseidon produce it’s contracts immediately. We recently filed a public records request and were denied this basic information. When the Water Authority board members asked for the contracts, they were denied as well. We cannot see how this PUBLIC-private partnership could possibly be undertaken in light of these facts, especially after what happened in Tampa Bay with Poseidon. If you look on Poseidon’s website under “experience”, there is no mention of the Tampa Bay desal plant, the only other desal plant they have attempted in the US and it was riddled with problems and cost overruns; its like they have conveniently forgotten that debacle.”

“Given that there are still serious concerns on the table, and rate payers are not clear what this water will cost, the Water Authority should not move forward with this deal” said Billings.

The monthly ratepayer’s oversight committee meeting will be held at 9:30 am Nov 19th at 9192 Topaz Way, San Diego, CA 92123.

Click here for pdf of press release.