You can surmise that a business is running into trouble when it starts lining up political firepower. Consider Poseidon Water, which has been trying for nearly 20 years to win approval for a $1-billion desalination plant on the Huntington Beach coastline.
Poseidon, which was acquired in 2015 by the giant Canadian conglomerate Brookfield Asset Management, has never been a skinflint with campaign and lobbying cash. As my colleague Bettina Boxall reported last year, the company has spent $1.6 million since 2000 on those efforts. Among its attorneys in proceedings before state regulators has been Kathleen Brown, Gov. Jerry Brown’s sister.
Last month, Poseidon added another name to its roster of influential representatives: former Democratic U.S. Sen. Barbara Boxer, who retired at the end of last year. Boxer says she’s been hired to represent Poseidon before state agencies with permitting jurisdiction over the project.
She wouldn’t say how much she’s getting paid, but says she has long been a supporter of desalination as an option to fill California’s water needs and is a fan of the Huntington Beach project specifically.
“I think this project is right,” she told me. “I was surprised to hear when they called me and asked me to help that it wasn’t done yet.”
But questions persist about whether the plant actually is “right.” That’s despite decades of discussion and Poseidon’s experience building and operating a major desalination plant in Carlsbad, which began serving San Diego with 50 million gallons of desalted seawater in 2015.
There are signs that skepticism is rising among water agencies. In March, the Orange County Water District, which likely would purchase and distribute the plant’s 56,000 acre-feet of annual output, said it shelved an environmental impact analysis until Poseidon obtains all its necessary state permits. The process of winning approvals from the State Lands Commission, the regional Water Quality Control Board and the Coastal Commission is likely to last at least into early 2018. (An acre-foot is enough to supply two typical households with water for a year.)
“We’ve seen a much more aggressive campaign from Poseidon while the local water agencies are beginning to get cold feet,” says Susan Jordan, executive director of the California Coastal Protection Network and a leading critic of the project.
Environmental groups remain firmly opposed to the plant, which would be at the site of a decommissioned electric generating station on Pacific Coast Highway. “It’s going to pollute our water, kill our marine life and cost a fortune, and we don’t need it,” says Ray Hiemstra, a top official at Orange County Coastkeeper.
At Poseidon, a sense of frustration is almost palpable. “There’s been no lack of public involvement since we started permitting this project in 2001,” says Scott Maloni, a Poseidon vice president. The cause of the delay, he says, is constant change in state regulations. “Every time we get close to the finish line, the state changes the rules of the game.”
In 2015, the state issued a desalination policy favoring the use of subsurface seawater intakes unless they’re judged technically or economically infeasible. The technology is thought to minimize the destruction of marine life, which can get sucked into unscreened intakes. Poseidon says that would more than double the cost of the plant, making it an economic loser, and argues that its plan to fit the electric plant’s old open-water cooling intakes with fine mesh screens would accomplish the same goal. That’s one of the issues the Coastal Commission will examine when it eventually considers whether to approve the plant.
No one disputes that desalination should be part of California’s water supply. The questions about Poseidon’s projects pertain to cost, timing and environmental impacts.
Some regions may need desalination more than others. San Diego, for instance, has fewer alternatives than elsewhere. Because it’s at the end of the line of traditional water deliveries and doesn’t have a groundwater basin to draw from, it’s particularly vulnerable to supply cutbacks during droughts and other emergencies.
Central and northern Orange County, which would be served by the Huntington Beach plant, are in much better condition; the region draws from an immense underground aquifer and can count on greater reliability of Metropolitan Water District supplies from the Colorado River and State Water Project.
Desalination typically is the most expensive water a community can buy. San Diego is committed to purchasing the Carlsbad plant’s entire output for 30 years for as much as $2,300 per acre-foot, plus inflation. That’s more than twice the price it pays for treated water from the Colorado River and Northern California provided by the Metropolitan Water District. Recycled water would cost the county as little as $1,200 per acre-foot, and the marginal cost of water obtained through conservation and efficiency measures could be as little as $150, according to a 2012 estimate by the Pacific Institute.
A tentative deal reached in 2015 between the Orange County Water District and Poseidon fixes the cost of Huntington Beach desalinated water at 20% over the MWD price for the first decade of a 50-year contract. The premium is reduced every 10 years, reaching zero in the final decade. The Orange County Water District would have to cover the cost of building and operating pipelines. These costs could boost the average residential water bill by $5 a month, the district says. That’s more than 10% of the average bill in some communities.
The deal is nonbinding, and the Orange County Water District says it will renegotiate terms before the plant is operational. The district may want to shorten the contract term to as little as 30 years instead of 50, according to engineering chief John Kennedy.
The real question pertains to need. The Municipal Water District of Orange County, which manages Metropolitan Water District deliveries to 2.3 million residents in most of the county, expects demand in its service area to grow by only about 2.5% through 2040 or even to fall, despite projected population growth of 10%. That’s largely because conservation will reduce per-capita consumption.
Conservation will reduce the burden of population growth throughout Southern California, according to the MWD, which expects demand to grow by a bit over 10% between now and 2040, assuming continued and increased conservation. The district is agnostic about whether the gap should be filled by desalination or other methods such as conservation, recycling or stormwater recapture.
Poseidon’s backers say the value of the Huntington Beach plant lies in its reliability. The higher price for its water will seem like a bargain if earthquakes rupture supply pipelines or a return of drought cuts drastically into imported supply.
Yet that still means the Huntington Beach project may be, if not totally unnecessary, at best premature. “You want to build projects when you need them,” says Heather Cooley, water program director at the Pacific Institute, “not with the hope that you’ll need them some day.”
Cooley points to the experience of Santa Barbara, which began building a $34-million desalination plant during the drought-stricken 1980s but mothballed it soon after completion in 1992. The city is now restarting the plant, at an additional cost of $70 million. Santa Barbara’s experience was replicated on a larger scale by Australia, which invested more than $12 billion in six desalination plants during a drought only to shut down four after rains returned.
Boxer maintains that the Poseidon plant — desalination in general — is an environmental imperative with the prospect of drought still looming over California. As senator, “I personally saw stakeholders tearing each other apart,” she says. “Fishermen vs. farmers, farmers against environmentalists, urban, suburban, rural users tearing each other’s eyes out. I view desal as not the only answer, but one of the tools in the toolkit.”