SD County Water Authority Ends Performance Reports for Carlsbad Desal Plant

Curious ratepayers must use the California Public Records Act to get basic information about the desal plant that cost them $142 million in 2020-21 for 10% of their drinking water

The San Diego County Water Authority (CWA) will no longer issue annual performance reports for its Carlsbad desalination plant, which provides 10 percent of the water it sells to 24 member-agencies but creates 20-24 percent of its water-supply expenses.

The plant was built by Poseidon Water, the company that will soon ask the California Coastal Commission for approval to build a nearly identical $1.4 billion desal plant in Huntington Beach.

In August, 2017, general manager Sandra Kerl issued the first annual performance report for the $1 billion Carlsbad facility.

“Going forward,” the report said, “staff intends to report on CDP (Carlsbad Desalination Plant) performance following the conclusions of each full contract year.” The CWA has a 30-year contract with Poseidon to buy at least 48,000 acre-feet of water a year regardless of need.

Once a year for the next three years those detailed reports were part of the official record at board meetings.

But when Ray Hiemstra , representing Orange County Coastkeeper, asked for the expected 2020-2021 update in September he was told that the reports had been discontinued by CWA’s board of directors. CWA legal counsel confirmed Hiemstra’s assertion with SoCalWaterWars.

“These reports have consistently been bad news for Poseidon, so I don’t blame them for trying to hide the information,” Hiemstra wrote in an email.

Hiemstra is currently working with other environmentalists and Orange County residents to stop Poseidon’s Huntington Beach project.

But I obtained the latest performance information after CWA board member Jose Preciado helped push through my public records request.

The annual reports provide details about CDP’s water delivery, water quality, compliance with environmental regulations, and costs. They also provide a window into the future of the Carlsbad and Huntington Beach projects and ocean desalination in general in California.

The most contentious issue is the cost of ocean desalination, which in this case is about three to four times the cost of imported water sold by the Metropolitan Water District of Southern California (MET), the main supplier of water (via the Colorado River and State Water Project) in Southern California.

For example, the current price for Poseidon’s Carlsbad desalinated water, according to records released to socalwaterwars.com, is $2,767 per acre-foot, which comes to a total of $142,614,224 for the 2020-21 fiscal year.

By comparison, the CWA buys fully treated MET water for $1,104 per acre-foot then sells it to its member agencies for $1,769, almost a $700 markup. Whereas the Municipal Water District of Orange County’s markup for the same water is less than $100/AF for its member agencies.

CWA’s financial experts recently warned of an eminent decline in credit ratings that would drastically increase its cost of borrowing, thus increasing rates even more.

Given the 30-year take or pay contract CWA has with Poseidon and the relatively and disproportionately high cost of its water (10% supply share vs. a 20-24% cost share), the desal plant figures heavily in the agency’s future debt and credit rating scenario.

Canceling the performance reports will surely displease CWA member agencies who blame lack of transparency, costly and unneeded water-supply projects, and a $2 billion debt for giving their ratepayers the highest water bills in the nation.

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“It’s concerning that SDCWA is discontinuing the reports,” one member-agency’s general manager told me—on the condition his name be withheld due to fear of retribution by the Authority. “The member agencies and the public expect and deserve full transparency in the operation of their investments. This [new] policy is counter to that.”

Compiled from San Diego County Water Authority performance reports for the Claude “Bud” Lewis Carlsbad Desalination Plant. No report was made for the first year of operation when the plant produced only 21,886/AF of drinking water. “Water delivery” refers to the difference between minimum production requirements (48,000/AF a year) and actual production. “Regulatory compliance” refers to protection of marine life. “Actual cost” includes debt service, pipeline conveyance, and all other related costs. Actual cost would be higher in production shortage years but for fines Poseidon paid, as indicated.

Other comments responding to the CWA’s discontinuance of annual performance reports for the Carlsbad ocean desalination plant:

“The data on the performance of Poseidon's Carlsbad desalination plant shows it continues to produce outrageously expensive water that provides no real benefit to ratepayers. Due to the Governors drought declaration residents are still required to reduce their water use by more than the 10% of water local supply Poseidon produces. The take or pay contract requires the San Diego County Water Authority to buy Poseidon's expensive water even as they reduce water use. This places a unfair burden on rate payers while filling the pockets of Poseidon's Wall Street investors.” Ray Hiemstra, Associate Director of Programs, Orange County Coastkeeper.

“I was told by the former General Manager of SDCWA, Maureen Stapleton, that she made a deal with the Devil-Poseidon but had an iron glad contract. I wonder how much you can trust the devil when they self report and pay no penalties for water quality and discharge violations. These performance reports need to continue on an ongoing basis until the end of the contract in 24 years, so we know the real cost to ratepayers. Especially now that oil spills and more red tide incidents further challenge the so called reliability of the Poseidon adventure.” Conner Everts, Facilitator: Environmental Water Caucus Executive Director: Southern California Watershed Alliance

When asked if the annual performance reports weren’t “a matter of basic transparency,” especially as water use sharply declines but water rates increase due to costly projects.

“Yeah, but … with the impact of the extended drought in California, agencies like County Water Authority have to figure out multiple ways of having water reliability assured. And one way we're doing that, of course, was with this Carlsbad desal plant. But another way is that we're supporting the development of reclaimed water here locally in the city of San Diego, in Oceanside, in Fallbrook and [with] the Helix and Padre Dam project.”

Jose Preciado, member of the board of directors at the Sweetwater Authority in south county and a member of the board of directors at SDCWA.

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