OC Water District Wants Poseidon Desal Plant to Rip Us Off Less Than It Can
Illustration by Kevin McVeigh
Last week, the Orange County Water District moved forward in the process that could eventually lead to a deal with Poseidon Water, voting 7-3 during a several-hour-long special meeting to accept an amended term sheet with the company that sets forth what an eventual water purchase agreement would actually look like.
The agreement, as often reiterated by OCWD staff, is not legally binding, and Poseidon still needs a permit from the California Coastal Commission before it can even begin construction (Poseidon and the commission are currently undergoing a design feasibility study. A ruling on the permit may come as early as the fall). What's particularly surprising about the amended agreement though, are the things that changed. While the bulk of the amendments were page numbers and re-wordings, OCWD and Poseidon did add new language to the rate sheet that applies to how much the district would pay for the water.
Namely, the new rate sheet includes language that would allow for a rate reduction tied to any new developed technology, and what is effectively a profit ceiling for Poseidon. Starting in year fifteen of the plant's operation (and every five years after), OCWD will be able to review the premium rate it would pay to Poseidon and revise that rate down if Poseidon is making too much money. How much exactly would be negotiated would be determined in the final water purchase agreement. These two additions are answers to direct issues we had with the original rate sheet, so I guess someone over at OCWD is a reader.
Now, if OCWD could only take care of the 50-year contract length, arbitrary price linkage to the imported water rate, and do something for the poor Huntington Beach residents who'd have to live next to this construction AND a Federal Superfund site, we might have something approaching a deal that wouldn't screw over ratepayers.. if desalinated water was economically viable in the first place, which it really isn't yet.
But hey, earliest projections wouldn't have the plant operational until 2019, so we can watch San Diego (who's paying the actual cost of the water, nearly double what imported water costs) overpay for a ton of water for a few years before biting the bullet ourselves.
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