Desalination projects raise issues of
private profit, public interest


By Bettina Boxall
Los Angeles Times

March 21, 2004

CARLSBAD, Calif. - A few hundred yards from the Pacific Ocean, at the end of a labyrinth of blue pipes and filters, Peter MacLaggan fills a plastic cup with water. This, he hopes, is his company's future.

It's purified sea water, stripped of its salts and ready for the tap. MacLaggan's firm, Poseidon Resources, is one of a handful of private businesses that want to sell Californians tens of millions of gallons a day of desalinated water.

Their sea-to-tap operations reflect the state's renewed interest in ocean desalination, which planners say could provide more than 1.5 million Californians with drinking water by 2030.

Although financial and environmental obstacles to desalination remain, more than 20 desalting proposals are under consideration on the California coast. Most are from public agencies, including the Los Angeles Department of Water and Power, the city of Santa Cruz and the Municipal Water District of Orange County.

But the most ambitious and potentially contentious are from the private sector, which, using public subsidies, wants to play a major role in developing a new water supply, something done largely by governments for the past century.

Poseidon, a small, privately held company based in Connecticut, proposes to build the biggest ocean-desalination plants in the Western Hemisphere on the Southern California coast, one in Huntington Beach and one in Carlsbad.

Each would be capable of producing 50 million gallons of drinking water a day.

To the north, California-American Water Co., a private utility owned by a German conglomerate, is proposing a 9 million-gallon-a-day desalination facility at Moss Landing on Monterey Bay. And a consortium of private engineering companies is floating plans for a 5 million-gallon-a-day desalination plant on the shores of Morro Bay.

The private plans have stirred concerns among some public officials and advocacy groups. They worry that a public resource, sea water, will be exploited for private profit.

They further warn that multinational companies could try to use international trade agreements to get around local and state environmental regulation of coastal plants.

Proponents say the public's interests would be protected by long-term contracts with private water companies. They note that private water utilities have operated in California since its infancy and provide about one-fifth of its drinking water.

They argue that in an era of government budget cuts and huge deficits, it makes sense for private investors to shoulder the financial risks of getting new technology into operation.

"We need to get creative," said MacLaggan, a senior vice president of Poseidon who joined the company three years ago and previously worked in water-supply planning for the San Diego County Water Authority.

Advances in desalting technology, pressure on Southern California to reduce its share of Colorado River water and the demands of an expanding population have turned the state's gaze to the sea.

"This is a potentially limitless supply of water," said Charles Keene, executive officer of the state Water Desalination Task Force, which concluded last year that desalination could play a meaningful role in California's water supply.

The task force acknowledged that private desalination operations raise "unique issues," but it did not discount them.

Despite a drop in desalination costs over the past decade, desalinated sea water remains at least twice as expensive as conventional water supplies in Southern California.

To develop the market, the Metropolitan Water District of Southern California, the region's largest water supplier, plans to offer subsidies to member agencies. The public water districts could use the money to offset the costs of producing desalinated water or to buy water from a private producer.

A national alliance of water agencies, which includes the Southern California district and the parent company of California-American, is lobbying for congressional authorization of hundreds of millions of dollars in energy grants to offset production costs.

Poseidon is counting on the water district subsidies to make its water more attractive to public customers. It also needs approval from local authorities and the state Coastal Commission, neither of which is proving easy to convince.

Environmentalists say the plants will promote population growth by creating an additional water source, threaten marine life with high-salinity discharges and consume large amounts of energy.

Poseidon says it can deal with the environmental issues and will continue to push both projects. But it still has to overcome the commission's skepticism.

In a draft report last year, the commission staff outlined a potential clash between the private sale of purified seawater and the state's Coastal Act, which considers ocean water a public resource to be protected.

The document also pointed to several cases in which multinational companies pursuing projects in the United States or elsewhere have filed claims under international trade treaties challenging government decisions that they say hurt their businesses.

"Right now we're just asking questions. Right now we don't have the answers," said environmental scientist Tom Luster, lead staffer on the report.

"I think the public is very uncomfortable with the privatization of something as essential as water, especially after the energy crisis, and we saw the manipulation of energy," said Huntington Beach Councilwoman Debbie Cook, who voted against the Poseidon project and was a member of the state Water Desalination Task Force.

The Los Angeles Times is a Tribune Publishing newspaper.