Orange County Water District Approves Updated Term Sheet for HB Desalination Plant
The Los Angeles Times published the following article on July 20, 2018.
O.C. Water District approves updated terms for buying water from H.B. desalination plant if Poseidon gets final permits
HUNTINGTON BEACH -- Despite pushback from about 80 environmentalists and other residents, the Orange County Water District board Wednesday approved an updated term sheet for buying water from the proposed Huntington Beach ocean desalination plant.
The 6-2 vote established the terms for a contract if plant builder Poseidon Water receives final permits necessary from the Regional Water Quality Control Board this year and the California Coastal Commission next year.
It also increased its project study budget from $320,000 to $370,000 to hire consultants to help evaluate different aspects of the proposal.
Board members Roger Yoh and Bruce Whitaker dissented, James Vanderbilt abstained and Philip Anthony was absent.
“The term sheet obligates us to do nothing at all,” board member Shawn Dewane told the audience in the Fountain Valley boardroom, the majority of which opposed the desalination plant. “All it does is acknowledge work over two years.”
Poseidon Vice President Scott Maloni saw the amended term sheet as “just the latest indication that Orange County values the water supply reliability benefits provided by the Huntington Beach desalination project,” he said in a statement. “We look forward to bringing closure to the permitting process early next year so we can finalize a water purchase agreement and bring this long-awaited project online.”
The updated term sheet shortens the length of a contract between the water district and Poseidon from 50 years to 30 or 35 years. It also shifts responsibilities and changes how the district would pay for Poseidon’s desalinated seawater.
The district is no longer looking to use a rate benchmark indexed by the Metropolitan Water District. Instead, it would pay Poseidon’s documented cost of service along with an agreed-on return on equity, according to a staff report.
The new approach is based on the agreement between Poseidon and the San Diego County Water Authority for the company’s Carlsbad desalination facility, which is in its third year of operation.
Under other changes in the term sheet, the Orange County district would assume the cost of electricity rate increases to help negotiate a better overall rate for water. District officials estimate water ratepayers would see a monthly increase of $3 to $6.
The district also would require Poseidon to finance and build a facility needed to distribute water to other water agencies.
Many speakers opposed to Poseidon urged the board to table the item and look for alternatives for supplying water to Orange County. Many opponents believe the $1-billion plant proposed for Newland Street and Pacific Coast Highway would harm marine animals by trapping them in the plant’s intake system and by discharging briny water separated in the desalination process.
“It’s not that we don’t need desal at this point, just not Poseidon,” said Pam Kamps of the activist group HB Huddle.
Poseidon has said there would be no significant impact on sea creatures and that it has committed to a plan for environmental protection and energy efficiency.
Garry Brown, founder of Orange County Coastkeeper, a Costa Mesa-based environmental group that has been highly critical of Poseidon, asked board members to “keep an open mind.”
Brown called the project complicated and expensive. He suggested looking into the Joint Water Pollution Control Plant, a wastewater treatment plant in Carson, as an alternative to Poseidon.
Huntington Beach Mayor Pro Tem Erik Peterson, who said he was speaking as a resident and not a representative of the city, said he has issues with the board potentially using taxpayers to benefit a for-profit company.
Whitaker, one of the dissenting votes on the board, shared Peterson’s outlook and said he wanted to signal that the board members weren’t all on the same page.
“I think discussion is still valuable to have,” Whitaker said. “I think it’s been worth getting best arguments tonight, pro or con.”
District officials had been scheduled to take action June 7 but delayed a vote because they wanted more time to review the rate plan and gather public input.
Clean Energy Capital serves as Financial Advisor to the Orange County Water District.