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Water Industry News

June 29, 2005

Carlsbad, CA desal project to get $14 million subsidy

By: Gig Conaughton -- Staff Writer

LOS ANGELES ---- San Diego County's dream of turning seawater into drinking water received a potential boost Tuesday when a key committee of Southern California's main water supplier recommended giving the proposed desalination project in Carlsbad as much as $14 million a year.

The recommendation would still need to be approved by the Metropolitan Water District of Southern California's full board next month ---- an action that Metropolitan officials said Tuesday was all but certain.

Now, the only question is: Does the San Diego County Water Authority still want the 25-year subsidy?

For more than three years, Water Authority officials have called the subsidy "critical" to the Carlsbad project, which is still up in the air, because the project would be too expensive without it.

But six months ago, in an action that left Water Authority board members howling in protest, Metropolitan's board linked the subsidy to a loyalty oath.

Metropolitan, created by the state Legislature in 1928 to build and run the Colorado River aqueduct, supplies more than 18 million Southern Californians with drinking water. The Water Authority, San Diego County's regional agency, is Metropolitan's biggest customer.

To receive the subsidy, the Water Authority must promise in writing that it will never challenge Metropolitan's rate structure in court or to the Legislature.

The Water Authority desperately does not want to make that promise.

That's because of its historic 45- to 75-year deal to buy billions of gallons of water from Imperial Valley farmers.

The Water Authority must rent Metropolitan pipelines to ship the Imperial Valley water to county residents ---- and Water Authority leaders say Metropolitan is overcharging for that rental.

With the water-transfer deal set to run as long as 75 years, a successful challenge of Metropolitan's "rental" rates could save the Water Authority, and San Diego County ratepayers, up to $2 billion.

But Water Authority officials also desperately want the desalination subsidy.

With political, environmental and drought pressures squeezing historical sources of water, such as precipitation in Northern California and the Colorado River, officials say that tapping the ocean will be key to future water supplies.

Water Authority managers declined comment Tuesday. But in a formal statement, public information officer John Liarakos said the Water Authority is pleased with the Metropolitan committee's decision.

Liarakos also said the Water Authority would not comment directly upon the issue of challenging the rate structure, other than to say the agency would deal with that question later.

"We are encouraged and pleased by today's action," he said. "When we get the formal contract or agreement to secure the subsidy, then we'll deal with any of the issues inherent in that agreement."

Deborah Man, Metropolitan's chief operating officer, said the agency's desalination committee on Tuesday unanimously recommended giving desalination subsidies to the Water Authority and four other Southern California water agencies.

The subsidy would pay the Water Authority $250 for every acre-foot of water ---- enough to sustain two households for a year ---- that the proposed Carlsbad plant would produce over 25 years.

Water Authority officials say that's enough to bring the still-expensive cost of extracting salt from seawater down from $800 per acre foot to $650 per acre foot ---- close enough to the $443 per acre-foot that it costs the Water Authority to buy Metropolitan's water to make the desalination project feasible.

The Carlsbad project, meanwhile, is still being haggled over. Connecticut-based Poseidon Inc., which has a 65-year leasehold on the proposed site at the Encina Power Plant, has signed a deal with the city of Carlsbad to build a plant that would churn out 50 million gallons a day. But most experts say that Carlsbad can't use enough of the plant's water to make the project work without the regional Water Authority being involved.

Poseidon and the Water Authority have bickered, but recently restarted talks to complete a deal.

writer Gig Conaughton at (760) 739-6696 or gconaughton@nctimes.com.