Will you be drinking ocean water? O.C. Water District to discuss buying from desalination plant

The Orange County Water District will begin talks with Poseidon Water to determine whether buying water from the company’s proposed Huntington Beach ocean desalination plant would be in the best interest of ratepayers.

District board members voted 9 to 1 on Wednesday to have staff negotiate a non-binding term sheet with Poseidon. The parties will have until March 18 to submit a draft.

Board member Jan Flory cast the dissenting vote.

The term sheet would cover the estimated cost of the water, identify the builder, owner and operator of the facility and the distribution system, and lay out how it all will be financed.

The board voted unanimously to create a citizens advisory committee to oversee the negotiation process. Each board member will choose two committee members and one backup. The district will gather applications from the public until the end of the month and make decisions in February.

“What’s going to make me decide whether or not I support agreeing with a private-sector, third-party developer on this is whether or not it makes sense to my ratepayers that I represent in Santa Ana,” said district First Vice President Vincent Sarmiento. “I need to figure out what that number is.”

The Orange County Water District covers most of northern Orange County, including Huntington Beach, Costa Mesa, Fountain Valley, Newport Beach, Seal Beach and Irvine.

The price of Poseidon’s water has not been pinned down. In 2013, the company estimated the cost at $1,812 per acre-foot, Poseidon Vice President Scott Maloni said.

In 2014, the district hired consultant Clean Energy Capital to study the financial aspects of the project, and it estimated the median price at $1,922 per acre-foot. During that study, Poseidon claimed its water would cost $1,871 per acre-foot.

At Poseidon’s desalination plant in Carlsbad, which is scheduled to go on line this fall, the San Diego County Water Authority pledged to buy desalinated water for $2,014 to $2,257 per acre-foot, according to the San Diego Union-Tribune.

The Orange County Water District currently buys untreated water from the Municipal Water District of Orange County for about $660 per acre-foot.

“I see this as a preliminary door to open talks,” newly elected board member Dina Nguyen said. “I’m not ready to make commitments, but I am ready to talk.”

Though many of the other directors shared Nguyen’s opinion, Flory and more than a dozen public speakers said it is too early to start negotiating with Poseidon, which has collected all but one permit to start building its plant next to the AES natural-gas-powered electricity plant at Pacific Coast Highway and Newland Street.

Poseidon needs California Coastal Commission approval of a development permit before construction can start.

In November 2013, the Coastal Commission held off on a decision on the project to allow for additional studies, specifically on the feasibility of subsurface intakes for the plant. Poseidon has proposed using open-water intakes from the AES plant.

In September last year, a panel of experts chosen by the Coastal Commission and Poseidon reported that two types of systems, seabed and beach subsurface intakes, are technically possible for the site. The commission and the company are selecting a new panel to study the feasibility of those systems, Poseidon Vice President Scott Maloni said.

Flory and Huntington Beach resident Bill Robeson said the water district should wait and see whether Poseidon’s Carlsbad project is a success.

“There is a term sheet, and that term sheet is what Poseidon has agreed to in Carlsbad,” Flory said. “I don’t expect that our term sheet will look a whole lot different than that.”

“Push the pause button and wait until that thing gets online … and watch that for a year,” Robeson said during about two hours of public comment. “[Carlsbad] is running a beta test, and almost never in business do you get an opportunity to have one of your projects beta-tested before you have to build it.”

Both the Huntington Beach and Carlsbad projects are expected to produce about 50 million gallons of desalinated water each day.

How water from Poseidon’s Huntington Beach facility would be transported to the water district and its customers remains a question. The district does not have wells to pump the water into its groundwater basin and would need to build them should it decide to buy water from the company.

The Santa Margarita Water District has expressed an intent to buy about 5,000 acre-feet of water from the Huntington Beach plant. However, former Costa Mesa Councilwoman Wendy Leece said that would require her city’s streets to be torn up so new piping could be installed for the water to reach south Orange County.

She said the Orange County Water District should have better outreach to Costa Mesa residents about the project.

“You need to take a step back and understand that the people in Costa Mesa who are going to have their streets torn up for the piping are not going to be happy,” she said.

[For the record, 12:30 p.m. Jan. 13: This story originally reported that the Orange County Water District purchases water from the Metropolitan Water District of Southern California for $1,003 per acre-foot. It actually purchases untreated water through the Municipal Water District of Orange County, a member of the Metropolitan district that acts as a water wholesaler to agencies in the county. The Orange County Water District buys untreated water from the Municipal Water District for about $660 per acre-foot. The price for treated water is $1,003.

Also, the story reported that Poseidon Water estimated the cost of its desalinated water at $1,424 per acre-foot in 2013. To clarify, that includes a $250-per-acre-foot subsidy from the Metropolitan Water District but does not include distribution costs. A more accurate figure is $1,812 per acre-foot.]