OCWD Votes To Postpone Decision On Poseidon’s New Term Sheet

Orange County Water District Board of Directors vote to postpone a decision on Poseidon term sheet (Photo: Mary Carreon)

Things have been quiet on the Poseidon front since the State Lands Commission hearing last October—until last Wednesday, that is. On June 6, the Orange County Water District (OCWD) Board of Directors held a meeting to discuss and vote on whether to adopt new terms of agreement regarding the proposed $1 billion desalination plant. It was generally expected for the Board to agree and move forward with the term sheet. To the surprise of many, however, the board unanimously voted to postpone making a decision and revisit it again in mid-July.

Those opposing the plant were happily shocked with the board’s decision to postpone the decision. “The meeting went a lot better than I thought,” said Ray Hiemstra, associate director of Orange County Coastkeeper. “The board members are obviously looking at this [project] a lot more closely and taking this a lot more seriously than I expected. So it’s a good sign.”

It should be noted that the new term sheet was crafted by members of Poseidon and an OCWD ad-hoc committee, consisting of several (not all) members of the OCWD board of directors. It was released on Friday, June 1.

Those in opposition of the project believe five days is not adequate time to review the changes to make a prudent decision.

John Kennedy, OCWD’s executive director of engineering and water resources, gave a presentation at the beginning of the meeting outlining the benefits and changes of the project’s new term sheet. The first significant change is that OCWD would pay Poseidon’s cost of service, plus an agreed to return on equity. Poseidon is not entitled to an annual automatic minimum rate increase, and every year Poseidon’s cost would be reviewed. “This is believed to be a cleaner, easier to understand approach,” Kennedy said, “and it matches…the Carlsbad project approach.”

The second major term sheet change is the contract length. Rather than binding OCWD to a contract that would require them to push Poseidon water for 50 years, the new contract terms would require OCWD to sell Poseidon water for 30 to 35 years. “50 years is too long of a commitment to purchase water,” Kennedy said. “There’s just too much potential for changes in the water industry as well as potential technological advances in 30, 40, 50 years from now.”

The issues with this alteration, and Kennedy’s statement, is the fact there’s already far more up-to-date desalination technology than what Poseidon would use. For example, the desalination plants in Israel use the most up-to-date, state-of-the-art desal technology, thus making their plants environmentally efficient. The difference between the tech used there versus the machinery Poseidon plans to use in Huntington Beach (and what’s currently in place in Carlsbad) is the difference between a Tesla and the car the Flinstones used to get around Bedrock. So, of course more advanced technology is going to develop—it already has. Also, a 30-35 year contract is better than a half-century, but it’s still three-and-a-half decades. 

Along with the second term sheet change, Kennedy explained that once the contract is over, OCWD would receive the plant. At that point, the capital cost will have been paid. The only thing OCWD would have to pay for is maintenance, electricity, and costs for repairs. “It’s sort of like paying off your house mortgage after 30 years.”

The third change makes OCWD have to take on the risk of Southern California Edison’s electricity rate increases. Under the previous terms, the electricity rate increase risk was allocated to Poseidon. But in order to absorb this risk, Poseidon would have to increase the rate charged to OCWD. With OCWD paying Poseidon’s actual cost, a lower water unit cost can be obtained. 

Lastly, the fourth change includes an option for Poseidon to construct necessary distribution system facilities to directly serve potable water, or drinking water, to other water agencies. OCWD would oversee the development of the distribution plan.

The changes to the terms are, essentially, Poseidon’s way of compromising to help gain support and move the plan forward. But there are still issues with these project alterations—especially because Poseidon still has the power and none of the changes involve mitigating the environmental issues the desalination plant creates.

Scott Maloni, Poseidon’s vice president of project development, speaks to OCWD Board of Directors (Photo: Mary Carreon)

Although many in attendance expressed support of the Poseidon project, including representatives from the Mesa and Rancho Santa Margarita Water Districts, Shirley Dettloff from the Amigos De Bolsa Chica, and a representative from League of United Latin American Citizens (LULAC). Even Jose Solorio, the Santa Ana Councilman, was in attendance and greeted Scott Maloni, Poseidon’s vice president of project development, with a friendly handshake. But there were an equal amount of people in opposition of the project– and most who spoke against it brought up the environmental damages and overall inefficiency of the Poseidon desalination plant in Carlsbad, Ca.

“There is great suspicion by many here in this room on the performance of the Poseidon plant in Carlsbad and its apparent problems with illegal toxic discharge,” said Michael Wellborn of Friends of Harbors, Beaches, and Parks. “They have been caught a number of times by the San Diego Water Quality Regional Control Board for those violations, and I think they have a problem with their engineering. Something is not working out right.”

In its first year of operation, the Poseidon desalination plant in Carlsbad racked up more than a dozen pollution citations. According to the San Diego Tribune, the plant also failed to deliver 20 percent of the water it had promised San Diego County.

The public comments were heated. Shots were fired at OCWD Director, Shawn Dewayne, for not recusing himself from the meeting, as he is reported to be Poseidon’s point man on the board. Hiemstra was called out by Maloni for hyping up the environmental problems of the project. And Hiemstra called out Maloni and the entire Poseidon squad for being dishonest about the project and their motives.

Tensions were still high after the meeting. We asked Hiemstra who he would recommend speaking to about the Carlsbad plant toxicity tests. He said Ben Niell from the Regional Water Board, whom Hiemstra received reports from showing that there have been multiple accounts of pollution. Then, Peter MacLaggan, Poseidon’s senior vice president of California’s project development, blatantly interrupted our interview to tell us that Hiemstra was wrong and that Niell “would say there’s been no toxicity spilled into the ocean” despite what the reports show.

Alas, the Poseidon saga continues. But the postponement of the term sheet decision is considered a win for those who oppose the project. “What this means to me is there’s some serious doubt among the board members,” Hiemstra said. “We’ll see how things go next meeting.”

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