Cage Rattled Hard, OCWD dons a fig leaf before marrying Poseidon.

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Most of the Board, including their esteemed Chairwoman, seem displeased with the ever-growing public attention to their actions regarding Poseidon.

I remember my first OC Water District meeting, maybe six months ago, which I attended at the urging of John Earl who invoked the blessed name of Gus Ayer.  I’d opposed the Poseidon project from the beginning, but not enough to go to a Water Board meeting!  Apparently though, this agency, this OCWD, had become the key group rolling out the red carpet for these Connecticut hedge fund pirates, so that’s where the action was/is.

And the thing is, some people spoke out at that meeting, eloquently and in great detail, against the Poseidon deal and also for transparency, except it was only half a dozen people and I knew them all – John, Debbie Cook, Merle Moshiri, folks from Surfrider, Coastkeeper and R4RD (Residents for Responsible Desalination.) 

Poseidon VP Scott Maloni, as well, poco miffed at the crowd turnout. [pic Amelia]

Well, they can’t say that any more – for some reason a real groundswell has grown against Poseidon, and at the last couple meetings where it was discussed, the hall was overflowing with  HUNDREDS of angry citizens, many of them making very good and original points against the proposed deal, and causing obvious discomfort to the secretive Board.  What can we credit for all the new public interest, skepticism, and knowledge?  Well… 

• Partly the excellent R4RD townhall event with Irvine’s Peer Swan, discussed here;
• Probably a recent, excellent OC Weekly cover story by Charles Lam;
• Doubtless the three big Huntington Beach Facebook forums which discuss Poseidon voraciously and whose members are well-represented at meetings now;
• And possibly even the efforts of this humble blog.

Poseidon dead-ender Shawn “Jersey Shore” Dewane makes one of his “Oh, did you just say something?” faces. [Pic Amelia.]

There were two main interconnected issues, both relating to Poseidon, under consideration at that March 18 meeting (which you can hear here):  the TERM SHEET detailing the terms under which the OCWD proposes to buy Poseidon’s water and sell it to us, and the CITIZENS’ ADVISORY COMMITTEE (CAC) which will purport to advise the Board on this term sheet.  Let’s talk first about:

The Citizens’ Advisory Committee.

There’s this thing, if you look at it cynically as you should, where when the majority of an elected body wants to take an action they know is unpopular, they’ll set up an advisory committee of some sort, so that it looks like the public has been consulted.  Except, it’s totally safe, because each of the members of the body gets to pick, say, two appointees, so you can be pretty much sure that the conclusion reached by the advisory committee will mirror what the body already wants to do.

And JUST IN CASE things don’t go as planned – if a couple members go rogue once they hear new info and follow their consciences (as happened hilariously in 2013 with the CAC on District Elections that the anti-districting Anaheim Council appointed) there’s the added level of safety that the committee is only ADVISORY, the body can still do what the hell ever it wants.  But preferably all the appointees stick to their agreed script – that way the whole charade can be used as a fig leaf later allowing the body to say “Hey, this is what the public wants – look at how our advisory committee voted!”

And some of us Poseidon opponents saw this CAC, cynically, that way… until some of the pro-Poseidon Board members started fighting its creation so hard, we started to think maybe it WOULD be worth something.  Sheldon in particular, the plump and ruddy preacher’s son who is just barely allowed to vote on Poseidon matters after years of being employed by the firm, spent a couple meetings trying to convince his colleagues that nobody should be allowed on the committee who had ever criticized Poseidon OR who lives near the proposed plant, because somehow THAT would be a conflict.  Such comic desperation made us wonder if maybe the committee would be worthwhile after all. 

Here, in case you were wondering, is who has ended up on the Committee, generally as far as I can tell mirroring their sponsor’s predisposition:

One of the first Board disagreements that came up March 18 was over the scope of the Committee’s work.  The startlingly sensible Jan Flory expressed dissatisfaction with  limiting the committee’s responsibility to “providing comments and feedback on the proposed project and term sheet.”  How can this project really be evaluated, she asked, if the committee is not allowed to discuss ALTERNATIVES to the project?  (Alternatives to Poseidon understood as conservation, expanded groundwater replenishment, rainwater capture, possibly building a desal plant ourselves – she mentioned specifically the ideas of Peer Swan.)  She hushed the audience’s thunderous applause:  “Seriously, ladies and gentlemen, I’m not saying this for applause, this is input the Board really needs to have.”  And then Jan continued by suggesting that, on such a huge and important matter, the committee should not be limited to three meetings, but allowed to continue “until their work is completed.” 

The staff spokesman began to agree that Jan’s ideas made great sense and they’d be glad to add them, but Chairwoman Green stopped them in their tracks:  “No, that is up to the Board!”

On this matter at least, Director Sheldon is an enthusiast for “representative” rather than “direct” democracy.

Then Jan’s opposite, the scarlet developer Steve Sheldon, spoke up in strenuous opposition to any further empowerment of the committee.  To begin to consider alternatives, the paternalistic Sheldon fretted, would drown the poor committee in overwhelming information, which they are not qualified to evaluate.   He continued emotionally, “I don’t know if it’s intentional, but we’re considering abdicating our responsibility to a panel of, um, uh, um, uh, well-intentioned, um, individuals, who may not have the expertise or the wherewithal to make these evaluations and recommendations.”  (Hear the exchange from 31:50 to 37:00.)

And then as it turned out, at the first of the committee’s three meetings eight days later (yeah I write slow)  committee member Diana Lee Carey attempted to convince the rest of the committee to vote to expand their own scope in the manner Jan had suggested, but she was rebuffed by the obedient majority who were more than happy to have their power circumscribed.  So there you have it – two more meetings, just to give “input and comments” on the term sheet.

That Term Sheet and its Discontents

So, here is the meat of things, the terms of your servitude and mine for the next 50 years if the Board gets its way:  You can read the “draft term sheet” for yourself right here.  Staff is very proud of what they’ve “negotiated” with the Connecticut water pirates, they believe it’s “just about perfect” except for maybe a few “minor details,” and it’s hard to picture a majority of this Board not approving it when it comes back in a few weeks with the approval of their committee.  It’s DIFFERENT from what we were expecting, but just as bad.  Let us count the ways:

“At the fence…”

That’s one big change we weren’t expecting:  Poseidon will be solely responsible for building and operating the plant and producing the fresh water, while OCWD will purchase that water “at the fence” (staff’s new favorite catchphrase) and be solely responsible for distributing it, and creating the huge system of pipelines to get it down to South County which is where it’s really needed.  That should allay our concern that us taxpayers will be on the hook for whatever failures the plant has – or our OCWD with its triple-A credit rating having to finance the plant for Poseidon with its junk-bond rating.

Or should it?  Our friend Sean Paden sped down once more from Fullerton to point out some very lawyerly language he spied in the term sheet:  Page 10, under #5, “Financing Plan”, specifies “Seller will be solely responsible for the financing of the Plant…” and then two sentences later:  “Notwithstanding the above, the Parties will work together to find the most cost-effective sources of financing, based on the desired allocation of performance and finance responsibilities to be undertaken by each Party.”  Said Paden to the Board, “Every lawyer here knows what ‘notwithstanding’ means – it means ‘Ignore the above.'”  (Or something to that effect.)  Sean later explained to me:

I read the latter part to mean that, despite the legal niceties that Poseidon will be “solely responsible” for financing the plan, the OCWD would assist in securing financing through county bonds.  It doesn’t say it directly, but in light of what was discussed in the last meeting, it seems a reasonable assumption.  Here’s my point: its not so much that the two provisions of the term sheet contradict each other, it is that as a practical matter it is IMPOSSIBLE for the OCWD to have genuine assurance that they will not be responsible for any cost overruns if they finance construction. If they are the ultimate guarantor and will be left holding the bag if Poseidon goes over budget and/or belly up the County will have to front any overruns to protect their billion dollar “investment” in Poseidon.

So there’s that, which seemed like maybe an improvement, and is possibly not. More certainly, there’s:

The “Reliability Premium”

It had been hard to compute how much more expensive Poseidon’s water would be than the water we have now, both because of Poseidon’s secrecy and countless other unpredictable variables, but we knew it would be a LOT more expensive due to the energy-intensive process and the necessity of building the plant.  Well, now we have a formula that they’re calling the “reliability premium” – no matter how much (or how little) our imported water we get through MWD costs, Poseidon’s water will cost us 20% more – kind of a ripoff if imported water rates rise, Poseidon’s costs do not, and their profits skyrocket, no?  The Weekly’s Charles Lam explains it better than I can:

…the latest sheet ties the price of desalinated water directly to the price of water imported from the Metropolitan Water District of Southern California (MWD), the agency that purchases imported water for all of Southern California. Under the proposed terms, Poseidon would charge the OCWD the MWD’s imported-water rate (currently $923 per acre-foot), plus any avoided MWD fees (about $80 per acre-foot), with an additional “reliability premium.” The premium would start at 20 percent for the first 10 years of the deal, then slide down in 5 percent chunks every 10 years, ending at nothing for the deal’s last decade.  [yada yada… read more here if you want]…

…While this pricing scheme alleviates much of the cost worries initially present in the project (that desal water was far more expensive than imported water), it removes one of the oft-repeated benefits of desalinated water–that it might eventually become cheaper than imported water, with more efficient technologies and increased water demand. In 2014, OCWD forecast that desalinated water might become cheaper than imported water after one or two decades of operation. Under the new rate sheet, though, desalinated water will always be more expensive or the same price as imported water no matter what, even three decades after when it should become cheaper.

That “reliability premium” became one of the major sticking points for the crowd during the March 18 meeting. “I don’t see why we’re paying Poseidon a 20 percent reliability premium over and above what the MWD is paying for water,” said Huntington Beach resident Clem Dominguez, earning applause from the crowd. “They’re building the plant; they’re running the plant; they have a cost. Once it’s up and running, if the MWD has to pay more for water from Colorado, what difference should that make? Why should we pay more to Poseidon? That makes no sense at all. . . . The bottom line is why does Poseidon get 20 percent more for doing nothing?”

Then there’s the other major change in the term sheet–the sheer length of the deal. While the term for both the 2013 term sheet and Poseidon’s water-purchase agreement with the SDCWA is 30 years, the deal outlined at the meeting lengthens the contract to a full half-century, an additional 20 years of more-expensive-than-necessary water and bad-for-the-environment intakes and outflows if the current design of the plant is approved.

But one thing Charles didn’t mention in his article:

Don’t forget the Distribution Costs!

Following are a few photographs of the pipeline construction going on around Poseidon’s new Carlsbad plant;  as part of this term sheet agreement, OCWD (you and me) is going to be taking on the responsibility of doing this kind of construction through the streets of Huntington Beach, Newport / Costa Mesa, and Irvine, to get Poseidon’s desalinated water to where it is actually needed/wanted – to South County developers:

Yep, the 20% reliability fee on top of MWD imported water prices will NOT the be full the cost of our Poseidon water – staff conveniently left out the little matter of DISTRIBUTION COSTS, which, on questioning from Director Phil Anthony (the longest-serving OCWD director, and one of possibly only TWO skeptical directors along with Flory) they blithely admitted to having not the foggiest notion what those might be.  (Since nobody is exactly sure who-all is going to really want or need the water.) 

Lovable Phil Anthony.  [Pic Amelia.]

“So then, COST is just one of those minor little issues that’ll be figured out later.”

Before I let you-all go, let me also point out IF YOU HADN’T HEARD:

1. North Orange County doesn’t need this water.
2. This proposed plant will slaughter countless fish larvae in its open intakes.
3. This proposed plant will create a dead zone on Huntington Beach’s coast with all the hypersalinated brine it will emit.
4. This proposed plant with its extreme energy-intensive process will add to our pollution and greenhouse gas problem.
5. The MORAL HAZARD – these Connecticut hedge-fund investors, who have spent twelve years buying off our politicians and water officials and wooing our labor unions, aim to make UNTOLD BILLIONS off our water needs over the next five decades, and they don’t deserve it.  WE CAN TAKE CARE OF IT OURSELVES.

Keep up the good fight, brothers and sisters!