With desal plant, rate hikes will vary for water districts across the county

With desal plant, rate hikes will vary for water districts across the county
An artist’s rending of the Carlsbad desalination plant, which is scheduled to be located to the northeast of the current Encina Power Station. The cost for various water agencies has yet to be determined; the allocation process will begin in the upcoming months. Courtesy image

CARLSBAD — Last week, the San Diego County Water Authority board approved a 30-year deal to buy water from a planned Carlsbad desalination plant. 

With the deal moving forward, an aspect that is yet to be settled is how much the plant will add to various districts’ water bills in the near future.

The plant is estimated to increase water bills for the typical household throughout the county by an average of $5 to $7 beginning in 2016, but that’s expected to vary for the 24 municipal water districts. Districts’ won’t know how much the desal plant will raise their bills until a full cost-of-service study is completed next year.

Some board members said they’re optimistic the costs associated with the plant will be fairly allocated throughout the agencies, while other water districts believe they’ll be forced to pay more than their fair share.

Currently, there are nine cost-allocation alternatives on the table. Gary Arant, general manager of the Valley Center Municipal District, said he was worried the board would back “Alternative 2,” which was promoted by the city of San Diego, the largest agency with 40 percent of the board’s weighted vote. To be adopted, a cost-allocation alternative needs 55 percent approval.

“Alternative 2 would have shifted more of the burden than fair onto some districts and financially benefited some like the city of San Diego,” Arant said, adding that the county should treat all the districts “equitably.”

But Arant voted in favor of the desalination plant because the board agreed to fully consider all of the alternatives equally.

Even if a more uniform cost-allocation alternative is chosen, Arant acknowledged his district would probably be paying more than the county average of $5 to $7. That’s largely because some districts like Valley Center buy all or most of their water treated, a major factor when divvying up the plant’s cost. Still, the extra expense is worth it in the longterm, he said.

“Desalination will mean a local, drought-proof water source,” Arant said. “That’s very important for us.”

Poseidon Resources, a private company that proposed the desalination plant, recently secured $840 million in financing for the project. The desalination plant would be built near the Encina Power Station in Carlsbad, and is scheduled to go online in 2016.

Eighty-five percent of the board approved plans to buy water from the plant; a 55 percent favorable vote was required for the deal to move forward.

Brian Brady, general manager of the Fallbrook Utility district, voted against. He said the desalination plant expenses would disproportionately hit his agency. Depending on the alternative chosen, by Brady’s analysis, residents’ water bills in his district would go up $10 to $23, with the higher end of the spectrum likely should Alternative 2 be picked, he said.

“The board did not eliminate Alternative 2 from the options — that’s troubling,” Brady said.

Brady said many of the alternatives are especially concerning for produce growers in his district who rely on large amounts of water. Further, he said his district might not see the water from the Carlsbad plant due to the current “piping network” that’s currently only designed to receive water from the Southern California Metropolitan Water District, and not the county.

Surfrider has criticized the board for voting on the desalination plant deal prior to the full cost-of-service-study being released.

“It’s putting the cart before the horse,” said Julia Chunn-Heer, campaign coordinator for Surfrider. She added that significant rate increases are possible due to unforeseen energy costs, and that more ratepayer information should have been presented to board members.

Ken Weinberg, the authority’s director of water sources, said last week’s meeting was proof that the board felt confident deciding whether to purchase water from the desalination plant.

“The meeting shows they felt they had enough information to vote,” Weinberg said, adding that the majority of districts are within the $5 to $7 range of projected cost increases. A few, including the city of San Diego, were below those figures.

According to Weinberg, the influence of the Carlsbad desal plant on districts’ rates will likely be reevaluated every five years or so.

He said that two independent experts will advise a board committee on how to fairly spread the costs of the plant throughout the districts in upcoming months. Weinberg noted that nine alternatives are guidelines, and that a hybrid of the alternatives could be selected.

“It was very clear during the last meeting that will be no preferences for any of the alternatives at this point,” Weinberg said.

The board will likely vote on a cost-allocation program for the plant in seven months or so, he said.

The desalination plant, which would be the largest in the Western Hemisphere, has the capacity to produce 50 million gallons of fresh drinking water a day. By 2020, it could supply an estimated 8 percent of San Diego County’s water, or about one-third of water generated in San Diego County.

Weinberg said that the water authority would not have to make payments to Poseidon until the company produces water that meets predetermined quality and quantity standards.

 

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