Lots of you haven’t clicked on Soaky the Drop to read nowaterdeal.com, the site prepared by Gus Ayer to combat the Poseidon desalination plant. Here’s lots of the information from that site to give you a taste of what’s there either directly or through the links. There’s more where this comes from.
As ratepayers in your district, we are asking that you:
- Keep us informed about whether our agency will be negotiating with Poseidon for purchase of expensive desalinated water. Not only do we want to know how much that water will ultimately add to our water bills, but we also want to know ALL of the assumptions behind how that calculation is made. No hiding behind confidentiality agreements!
- No “Take or Pay” Deals with Poseidon. We don’t want to be stuck paying for water we don’t need. We don’t want to pay back bonds for a water factory that sits idle because it’s too expensive to operate.
- No Public Subsidies for Private Profits. We don’t want public agencies to provide subsidies for Poseidon water that are really just added back into our water bill by increasing the cost of imported water or groundwater. We don’t want you to agree to clauses that could lead to a public bail-out if this private operation isn’t making it.
- Look at Other Choices First. Major reports that have studied allof the costs of desalinated water have concluded that this is the last option we should try, after we have already invested in all of the less expensive alternatives including further expansion of our storage facilities, expansion of the Groundwater Replenishment System and market-based programs to reward conservation.
$8500 per Customer
How accurate are these estimates?
It’s hard to tell with the limited amount of information that Poseidon has released on their draft term sheet.
Obviously, a very large user – a high school with athletic fields, a hotel, a homeowners association, an apartment owner, a supermarket, restaurant or manufacturing facility, will have a bill much higher than the average customer. A frugal individual customer may have a much lower long-term cost.
But the cost of these “Take-or-Pay” contracts will be pushed through into the general cost of living throughout Orange County.
Many, Many Questions
There are a lot of unknowns when it comes to the long-term costs of Poseidon’s water because Poseidon is not releasing to the public the underlying data. We can see the total cost they are estimating, and we can also see that they are assuming that they will receive $14 million a year in subsidies which will then be passed onto rate payers.
There are also different estimates of what it will cost to build and operate the pipeline and pump stations that will connect their plant to the water system, a cost that is now assumed to be passed onto the local ratepayers.
But we can’t see how they arrived at their numbers and neither do the agencies they are lobbying to sign “Take-or-Pay”contracts.
We can’t see whether these calculations jibe with what we can project about electricity rates and water rates. Here are all the areas where there are questions left unanswered:
Demand for Imported Water Steadily Decreasing
Will there be any demand for this expensive manufactured water, or will the higher prices required to buy Poseidon’s water reduce demand to the point that we don’t actually need Poseidon’s water?
Per capita demand for water has been steadily declining and total water demand has been flat.
Here’s a graphic from the Mesa Water District’s website that tracks demand over time as we consumers steadily become more water efficient. Water forecasts continue to show that our biggest source will come from smarter use of our existing water through storage, conservation, and replenishment of our groundwater basin.
In Orange County, our supply of water produced from our local groundwater basin is continuing to increase with the successful completion of the Groundwater Replenishment System. By 2015, seventy-five percent of the water in most Orange County cities will come from the aquifer below us, up from sixty-two percent just a few years ago.
What Is the structure of the bond financing that they are anticipating?
Will they have level payments that stay the same every year, or will they use the type of bonds that were issued in San Diego where the payments escalate over the term of the bonds.
Will their financing costs be higher in Orange County where they don’t have a single agency that has the authority to commit to a thirty-year “take-or-pay” contract that serves as a guarantee for their bonds.Even with that guarantee in San Diego, and using a state agency to issue tax-free bonds , Poseidon’s bond rating was BBB-, the lowest investment grade rating.
The term sheet allows for a thirty per cent increase in the cost of the water based on unforeseen circumstance or changes in regulations.
We know that new regulations regarding ocean intakes are in the process of being implemented but there is no estimate of the final cost when regulations are finalized.
What assumptions is Poseidon making about energy costs?
Estimates show that up to 36% of the cost of water desalination is for energy.
The chart at the left from Pacific Institute shows the annual cost breakdown of a typical seawater desalination plant.
Southern California Edison is in the process of implementing increases in their rates – an immediate 5% retroactive to 2012 and an additional 6.3% for 2013 and 5.9% in 2014 under the PUC order.
What assumptions are being made about future electrical rates, and how much will the price of desalinated water increase to pay higher energy costs, especially if the nuclear plant at San Onofre is never reopened?
Poseidon is assuming that the Metropolitan Water District will provide a $14 million per year subsidy for Poseidon’s water (56,000 acre feet x $250 per acre foot). That subsidy is paid for with higher water rates on water purchased from MET, so in theory, everyone in Southern California is helping to pay for this water, and cities in South Orange County which import almost all their water will pay more.
Ironically, part of Poseidon’s argument for higher water rates is that MET rates will increase, and part of the increase in MET rates will come from the subsidies that go to Poseidon.
What is the Take or Pay Price for an Idled Plant?
If the Poseidon plant is turned off, like four of the six desalination plants recently built in Australia, what is our cost to pay for a “stranded asset?”
Are We Really Replacing Imported Water?
Poseidon frequently releases lowball estimates of the monthly cost per user that seem to assume that Poseidon’s water will replace the most expensive water we currently buy – fully treated water purchased from MWD.
But should we compare it to the cost of proven conservation programs that cost from $200 to $600 per acre foot? Should we compare it to the cost of water that can be purchased and stored in Kern County for $40 an acre foot, or untreated imported water that can be spread in our percolation basins? If we take the worst case and assume that we are substituting water that costs $1800 an acre foot for water that costs $835 an acre foot, maybe the calculation should show that the 30 year cost is only $2.8 billion added into local water bills instead of 5.6 billion.
Who Assumes the Risks
Who will insure the long-term cost of risks for Poseidon?
The proposed plant will sit above a confluence of active earthquake faults in the tsunami run-up zone.
Will Poseidon purchase earthquake insurance or will the public be on the hook if an earthquake damages Poseidon’s plant or transmission lines?
The draft term sheets only references “Builder’s risk insurance”, which is a special type of insurance which indemnifies against damage to buildings while they are under construction.
The Phony “Technological Advances” Argument
In a recent Huntington Beach Independent article, Poseidon spokesperson Brian Lochrie claimed,
“Lochrie said the price for their water may currently be steep, but costs could potentially decrease depending on “technological advances” in desalination production in the future.”
Speculation about retrofitting an existing plant to new unspecified technology should never be a consideration used in long-term financial decision making. Why hasn’t Australia seen reductions in costs as they built out their plants?
The Need for Transparency
Amazingly enough, the San Diego Water Authority signed a 30 year “Take or Pay” contract without completing a detailed study of how the costs would affect customer rates in each individual agency. When they approved over $4 billion in guaranteed payments to Poseidon, they had not even agreed on the framework to do a detailed agency by agency cost projection. We cannot let this happen in Orange County.
Before any agency signs any agreement that will increase future water bills, we need to see the detailed projections of exactly what it will cost residents and businesses, how demand is projected, with detailed data about how the assumptions are reached.
More information on costs and risks can be found in this report by the Pacific Institute.
Poseidon – Wrong Direction for Our Environment
Whenever we look at our regional water supply, we need to look at the big picture, including the impact on our marine environment and the energy use.
Clean Oceans and Clean Water
Our oceans, waves, and beaches are important to all of us, not just because they play such an important part in our lives, but also because clean oceans and beaches have a big impact on our economy and property values.
We’ve been making great progress in cleaning up our oceans and beaches. A historic 2002 agreement between our Sanitation District (OCSD) and our groundwater management agency (OCWD) reduced the amount of partially treated sewage flowing into the ocean off Huntington Beach, and instead led to a new source of purified water to replenish our groundwater basin.
We have been making continual strides in reducing the pollution that flows into the ocean, including using natural wetlands to filter run-off and processing polluted water from the Santa Ana River through our Sanitation District treatment plants.
Local gardeners are learning to have Ocean Friendly gardens, which reduce the fertilizer and pesticides running off from our yards and garden when it rains.
Step by step, our oceans and beaches have been getting cleaner.
Impacts of the Poseidon Factory
Killing Sea Life
One of the problems with the Poseidon Desalination proposal is that it is counting on using open ocean intake pipes to suck tens of millions of gallons of water into its factory every day. Every last fish and marine organism in that water will be pureed, just as if it were in a blender.
Power plants like the AES plant are already agreed and scheduled replacement of open ocean intakes, and new regulations are being proposed for desalination plants.
A Hyper-Saline Briny Stew Discharged
At the end of the process, the proposed plant will discharge a concentrated brine back into the ocean off our beaches. This dissolves back into the ocean, but the government is currently evaluating new standards to protect our marine environment.
Industrial Uses on the Beachfront
Many local residents question whether valuable beachfront land is the best place for power plants or industrial operations like the proposed desalination factory. Might it be better if AES, which owns the land, relocates its new power plant inland and allows for the best and highest use of this ocean-front property.
Wasting Energy and Fossil Fuels
Ocean water desalination is very energy intensive. The process uses three times as much energy per gallon of water as our Ground Water Replenishment system, which also uses reverse osmosis. And using energy produces greenhouse gases.
Compared to other choices, like conservation or additional local storage, it’s a real energy hog, which is a big reason why the process is so expensive.
When we look at all the environmental impacts,Poseidon represents a big step backwards.
Here’s a great animated video from our friends at Surfrider Foundation that emphasizes all the impacts of the cycle of water.
Two Big Myths About Water
If you listen to the lobbyists who are pushing the Poseidon project, you will constantly hear
- There is some sort of immediate water supply crisis
- We need a more reliable source of water.
This is just not true in Orange County where our local water agencies have done a superb job of managing our local groundwater basin to provide the most natural, pure and reliable water supply.
Local wells and reservoirs are strategically located in many locations across the county with a high degree of redundancy in case one or more wells fail.
While we have long-term issues balancing supply and demand, especially with impacts from climate change, we have already invested to assure local storage and reliability.
By 2016, 75% of our water in most of the cities in the county will come from groundwater. In a major catastrophe, emergency plans allow for that water to be borrowed by South County cities that rely primarily on imported water.
Our Groundwater Replenishment System
People come from around the world to visit the Ground Water Replenishment System (GWRS) operations in Fountain Valley, which takes treated wastewater from our Orange County Sanitation District (OCSD) plants and purify that water to drinking standards. That water is then percolated back into the basin or pumped into special injection wells that prevent seawater from intruding into the basin.
It currently produces 70 million gallons a day. Phase 2 of this process is now under construction that will allow for a total of 90 million gallons a day. A third phase could be implemented at a later date could stretch that to 116 million gallons a day (www.gwrsystem.com).
MET’s Regional Success for Storage
Not only has our local Groundwater management agency done a great job to assure a reliable water supply, but our regional water agency, the Metropolitan Water District (MET), has taken a long-term proactive approach to storing water against dry years. We now have multiple years worth of water stored in regional reservoirs in addition to the water stored in our groundwater basin.
As we move forward we have additional choices which are more environmentally, sustainable, and significantly less expensive than ocean desalination.
The following alternatives to ocean desalination borrow heavily from this recent economic analysis that looked specifically at the costs of the proposed Delta Conveyance system.
LOCAL WATER SUPPLY OPTIONS
Reviewed were potential water-supply options that could help meet future water demands: conservation, water reuse and recycling, storm water capture, and groundwater desalination. Each addresses the alternative potential and costs.
Analysts conclude that significant potential exists to decrease demand for water through greater efficiency and conservation. Water conservation methods involve little risk and impose few external costs. Conservation may also have other benefits — including decreased greenhouse gas emissions.
The cost of current conservation programs, including rebates, incentives and hardware installation programs range from $75 per acre-foot (AF) to $900 per AF. The authors of a 2008 study funded by the Los Angeles County Economic Development Corporation (LAEDC) estimate the cost per AF of Santa Monica’s urban water conservation at $210 per AF. Conservation is the most cost-effective way to alleviate California’s water problems (LAEDC Report-PDF)
Recycled water projects currently provide water for landscape irrigation, industrial and commercial uses.
The 2002 Southern California Comprehensive Water Reclamation and Reuse Study identified 30 projects in a six-county area with the potential to yield more than 450,000 AF. The cost of water recycling projects is approximately $600 to $1,500 per AF. This includes capital, operations, and maintenance costs. Using an Orange County Water District recycling plant as a case study, LAEDC estimates that the all-in cost of water from the plant is $1,000 per AF, including capital and operating costs, and treatment. The Eastern Municipal Water District, which has a smaller recycling operation, produces 13,700 AF of water per year at a cost of approximately $350 per AF.
The LAEDC estimates that the potential for stormwater capture in southern California is “tens of thousands of acre-feet.” Because stormwater capture depends on rainfall, it is less reliable than other alternatives. According to researchers with the American Society of Civil Engineers, stormwater capture programs can have environmental benefits; particularly those that remove contaminants from urban stormwater runoff, provide flow augmentation and keep polluted stormwater from entering local streams and rivers.
Stormwater capture can incur large initial costs, and operating costs vary significantly by facility. The LAEDC estimates that stormwater capture in Southern California would cost between $300 and $400 per AF, which includes treatment costs of $155 per AF. These numbers are highly site-specific.
Here in Orange County, we have a huge opportunity for additional capture of stormwater behind the Prado Dam when this project is completed in 2016. This dam has been developed only for flood control, but the Orange County Water District is working on long-term plans that would allow more water to be stored over a longer term and then percolated into our groundwater basin.
Stormwater capture is also practical at the homeowner level, as demonstrated in Surfrider’s Ocean Friendly Garden program, which helps individuals learn how to design their gardens to capture rainwater rather than have it drain into the gutters and then the oceans.
Desalination of groundwater is lower risk and less expensive than its ocean counterpart. It too requires substantial initial costs and is energy intensive. The facilities also impose external costs in the form of greenhouse gases, but require less energy than ocean desalination.
Groundwater desalination plants need not be located close to the coast. Using the Menifee Desalter facility in Riverside County as a case study, the LAEDC estimates that the cost per AF of groundwater desalination would be approximately $750–$1,200.
Representatives from the Richard A. Reynolds Groundwater Desalination Facility in Chula Vista, California, estimate that it produces water at a cost of $750 per AF, which includes capital and operating costs.
Australia’s Desalination Disaster:
Posted by R4 Rd · March 27, 2013 11:03 PM
NOT one drop of water from Victoria’s $5.7 billion desalination plant has been ordered for the state’s supply, for the second year in a row.
With Melbourne’s water storages at three-quarters full and holding more than 1300 gigalitres, the state government has placed a zero gigalitre order for the 2013/14 financial year. Despite this, Melbourne Water customers will still have to pay $650 million in annual holding payments over 2013/14 due to a contract signed by the previous Labor government, Water Minister Peter Walsh said. The plant will remain in standby mode, with a decision on a 2014/15 order due by April 1 next year, he said. “There is no point in ordering water that is not actually needed,” Mr Walsh told reporters on Wednesday.
Henrietta Cook, April 23, 2013[Caption: Yarra Valley Water customers’ average residential bills will surge from $970 to $1204 under the draft decision. Photo: Dominic O’Brien]
Water bills for the average Melbourne household could soar by about $200 next year to help recoup the cost of the multi-billion dollar desalination plant.
A draft decision released by the Essential Services Commission on Tuesday rejected price rises of almost $300 proposed by water retailers.
Melbourne’s water retailers were seeking an increase in residential water and sewerage bills of between 31.7 to 35.8 per cent over the next five years to recover costs from the Wonthaggi desalination plant.
Water Minister Peter Walsh said that if the desalination plant had not been built, bills may have only increased by around $50 next year.
“The overwhelming majority of the price increase is because of the desalination plant, a legacy that the Labor Party and Daniel Andrews have left for the people of Melbourne.”
Commission chairman Ron Ben-David said the desalination plant was the ”single biggest driver” of the price increases.
Call to extend South Australian water rebate forever after damning desal reportDANIEL WILLS, THE ADVERTISER, MAY 07, 2013 11:42PM
SOCIAL service providers have demanded the Government deliver a big cut to water prices after the release of a report that is critical of the costly decision to double the size of Adelaide’s desalination plant.
The federal Auditor-General’s report has sparked new claims that the controversial expansion, largely funded through big water bill increases, was made on purely political grounds.SA Council of Social Service executive director Ross Womersley said he always doubted the need to double the plant size, given it “would have to be paid for and have a huge impact on (water) prices”.
“The water rebate ought to be extended on a permanent basis to everybody that has access to the concession. That would be a reasonable response to try to protect people on the lowest incomes,” he said yesterday.
“People will be rightly frustrated and annoyed and they have been pushed to a level of vulnerability.”
The audit report found Infrastructure Australia, an independent Federal Government advisory group, ruled the benefit-to-cost ratio of the expansion was “too low, such that it did not offer a net economic benefit”.
Desalination destroys the environment and isn’t a quick fix for Southern California’s water woes
Monday, March 4, 2013By Ray Hiemstra
Many people in Southern California think that we are in a perpetual drought and will not have enough water to sustain ourselves. Unfortunately, this common fear is fueling misguided support for ocean desalination, the process of removing salt from seawater to create potable water.
Our fresh water supply is often wasted and underutilized, especially when 60% percent of the water we produce goes towards landscaping purposes, not human sustenance. We need to use what we have wisely, and consider innovative, cost effective and environmentally friendly supply options.
There are currently 16 proposed desalination plants in California, and the idea is spreading. Desalination is the most environmentally damaging, energy intensive and expensive water supply option. In Huntington Beach, Poseidon Resources, a Connecticut-based corporation, plans to privatize a public good, and use outdated technologies to make a profit at the expense of ocean ecosystems and ratepayers wallets. Poseidon has never successfully built a large desalination plant before; they have only demonstrated that they are good at making closed-door deals.
Poseidon plans to use open ocean intake pipes, which the State of California has required all coastal power plants to discontinue using by 2020. Open ocean intakes suck in and kill billions of fish eggs, adult fish and other marine life. Not only is desalination harmful when taking water in, but also when it expels hyper saline brine, the salt by-product of the desalination process. In addition to a very high concentration of salt, brine also contains other pollutants such as heavy metals that can bioaccumulate throughout the food chain.
According to a study by the Pacific Institute, “direct discharges into estuaries and the ocean disrupt natural salinity balances and cause environmental damage of sensitive marshes or fisheries.” The brine discharge from the Poseidon plant will cause a dead zone off the coast of Huntington Beach. (For more information on opposition to the Poseidon plan, go to nowaterdeal.com.
Desalination not only harms marine resources, but it also affects our climate through increased greenhouse gas (GHG) emissions. Desalination is the most energy intensive water supply option. The Poseidon Huntington Beach plant would use enough energy to power 30,000 homes. Twenty percent of California’s cumulative energy demand goes to moving and treating water.
In a 2008 report, the California Air Resources Board noted that a way for the state to reach its reduced GHG goals is to replace existing water supply and treatment processes with more energy efficient alternatives. Desalination is a step in the wrong direction if we want to reach this goal.
A recently approved Poseidon desalination plant in Carlsbad was originally estimated to cost around $250 million; now it is nearly a $1 billion project. The water to be produced at the plant costs 4 to 8 times more than other water sources such as groundwater or recycled water. And rate payers are bound to a 30- year contract to buy the water.
Desalination may be one of the tools that water agencies and the public choose to pursue in the future but not before fully exploring and adopting the less expensive and proven options such as promoting water use efficiency, or funding the expanded use of recycling systems such as the Ground Water Replenishment System in Fountain Valley. The system takes highly treated wastewater that would have been discharged into the ocean and purifies it at a very affordable rate. In fact, the cost of water, per acre-foot, produced at the replenishment system costs one-third of what distributed water produced from a desalination plant would cost.
Capturing urban runoff from the many high volume creeks and streams throughout the region, which dump hundreds of millions of gallons of polluted water a day into the ocean, is a viable and cost-effective alternative. Richard Atwater, Executive Director of the Southern California Water Committee recently stated that Southern California needs to “recognize the importance and potential of stormwater as a supplemental water supply source to what we currently import”. Much of this water should be captured and recycled to provide indirect potable water and reduce pollution to our ocean, which is required by law anyway.
Another flaw of building a desalination plant in Huntington Beach is that the Orange County Sanitation District releases millions of gallons of secondary treated water a day into the ocean less than a mile from the site for the desalination plant. Why treat wastewater, release it into the ocean, then spend $1 billion to build a plant that sucks that same water back in just to take the salt out of it? The water coming out of the sanitation district’s facility is already being treated at a level that it could be used as an indirect potable water source to expand the Ground Water Replenishment System.
Water reuse can help better utilize our current water supply, but we can also implement more conservation measures on the demand side. A cost-effective example is the move some cities are making to stop using potable water for landscaping. Reclaimed water is clean and safe enough to be utilized for irrigation. With the elimination of overwatering and the use of modern landscaping featuring California Friendly vegetation, we can drastically reduce the amount of water needed for landscaping and use the saved water for people and industry. The resulting water savings would help protect our current water supply, save ratepayers money, and reduce the need to create, or import more water.
The Sierra Club realizes that desalination is a necessary option for the future, in regions that have exhausted all other options. What we are opposed to is using destructive 1960s technology that destroys our fish stocks and pollutes our ocean. Other countries have implemented desalination as a last resort when all other options have been tried. Hopefully California will do the same.
The Poseidon Huntington Beach project will be the turning point on desalination is done in California and your help is needed. Watch for messages from the Sierra Club Angeles Chapter regarding opportunities to send in letters or attend meetings to stop Poseidon and protect our environment.
Ray Hiemstra is the Orange County Conservation Committee Chair for the Angeles Chapter Sierra Club. Top photo: A desalination plant in Tampa Bay, Fla.