San Diego County Water Authority - News / = Publications

From: Subject: San Diego County Water Authority - News / Publications Date: Wed, 11 Aug 2010 07:50:42 -0700 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----=_NextPart_000_0000_01CB3929.E63EF880" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.5931 This is a multi-part message in MIME format. ------=_NextPart_000_0000_01CB3929.E63EF880 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.sdcwa.org/news/2010_0722_Carlsbaddesalinationtermsandconditions.phtml San Diego County Water Authority - News / = Publications

=20

News Release

San Diego County = Water=20 Authority
News Release: July 22, = 2010

Contact:
John=20 Liarakos
Office: (858) 522-6703
Cell: = (858)=20 761-2544

or
Denise=20 Vedder
Office (858) 522-6709
Cell: = (619)=20 770-8403

Water Authority Board Approves = Terms and=20 Conditions for Negotiating Carlsbad Desalination = Project Water=20 Purchase Agreement

The San Diego County Water Authority Board of = Directors=20 today approved key terms for purchasing water from the = nation's largest seawater desalination facility in=20 Carlsbad.

Today's action enables Water Authority staff to = begin=20 negotiating specific elements for a water purchase = agreement=20 with Poseidon Resources, the private firm developing = the=20 Carlsbad Desalination Project. These elements include = water=20 purchase price, allocation of risk and options to = eventually=20 purchase the project's pipeline and the entire = desalination=20 plant

Under terms agreed to by Poseidon and the Water = Authority,=20 before negotiations begin on a final agreement, = Poseidon must=20 secure sufficient financial commitments from private = investors=20 to meet requirements for fully funding project = construction.=20 In addition, prior to Water Authority Board approval = of a=20 final agreement, Poseidon must execute all agreements = for=20 construction and operation of the project and finalize = the=20 documents needed to finance the project in the bond=20 market.

"These terms are not a binding contract, but = provide a=20 solid foundation for reaching a water purchase = agreement that=20 keeps this important regional water supply project = moving=20 forward," said Claude A. "Bud" Lewis, Water Authority = Board=20 Chair. "They also will protect our ratepayers' = interests by=20 assigning appropriate upfront risks of building, = financing,=20 and operating the plant to the private sector, while = providing=20 for eventual public ownership of the project."

Key terms for the water purchase agreement = include:

=95 The term of the agreement will be for 30 = years once=20 commercial operation begins, subject to early buyout = provisions outlined below.

=95 The Water Authority will have no = responsibility or=20 liability for the design, permitting, financing,=20 construction, or operation of the project.

=95 The maximum price for purchasing water will = be set=20 equal to the contract price in the existing water = purchase=20 agreements with the Desal Partners, nine local water = agencies currently contracted to buy water from the=20 desalination project. That contract price consists = of a=20 production cost of approximately $1,100 per = acre-foot and a=20 delivery charge of about $500 per acre-foot, with = annual=20 escalators tied to inflation. That price is = competitive with=20 other local supply options and other desalination = projects=20 worldwide. The terms also set principles for = structuring=20 price so that both parties will explore ways for the = Water=20 Authority to share in potential cost-saving = measures.=20

=95 An option for the Water Authority to = purchase the=20 project=92s conveyance pipeline from the plant site = to the=20 Water Authority=92s Second Aqueduct in San Marcos, = once the=20 plant has a proven track record of successful = operation.=20 Purchasing the pipeline could enable the Water = Authority to=20 reduce the price of the project=92s water by up to = $200 per=20 acre-foot.

=95 An option to buy the entire = plant=20 beginning 10 years after the start date for = commercial=20 operation at a price to be specified in the water = purchase=20 agreement. The right to purchase the plant at the = end of the=20 30-year water purchase agreement term for $1. This = would=20 ensure eventual public ownership of the plant, = securing=20 long-term price certainty and regional public = benefit from=20 ratepayers=92 past investments in the plant through = 30 years=20 of water purchase payments.

The Water Authority will also conduct extensive = analyses of=20 the project's financial, legal, engineering and other=20 technical aspects to ensure the project's water = reliability=20 and water quality meet the Water Authority's standards = prior=20 to approving a water purchase agreement. The Board = approved=20 spending up to $300,000 for these studies and for = expert=20 business and legal advice during contract = negotiations.

The Carlsbad Desalination Project, under = development since=20 1998, is a fully permitted seawater desalination = facility with=20 all environmental clearances. IDE Technologies, a = worldwide=20 leader in the design, construction and operation of=20 desalination plants, was selected by Poseidon through = a=20 competitive procurement process to be the desalination = process=20 contractor for the project. IDE has extensive = experience in=20 seawater desalination having constructed and operated = two of=20 the largest reverse osmosis desalination plants in the = world=20 at Ashkelon and Hadera, Israel.

When completed, the Carlsbad plant will provide = 56,000=20 acre-feet of water annually. By 2020, the project will = supply=20 approximately 8 percent of the region's total water = supply.=20

# # #

___________________________________________________________________= _________
The San Diego = County=20 Water Authority is a public agency serving the San = Diego=20 region as a wholesale supplier of water from the = Colorado=20 River and Northern California. The Water = Authority works=20 through its 24 member = agencies to=20 provide a safe, reliable water supply to support the = region=92s=20 $174 billion = economy and the=20 quality of life of 3.2 million=20 residents.

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