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Carlsbad Desalination Project Status Update Bob Yamada, San Diego County Water Authority. 5th annual Blue Tech & Blue Economy Summit Desalination & Clean Water Technologies – Worldwide Industry. Water Authority Background. Wholesale water agency created by State Legislature in 1944
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Carlsbad Desalination Project Status Update Bob Yamada, San Diego County Water Authority 5th annual Blue Tech & Blue Economy Summit Desalination & Clean Water Technologies – Worldwide Industry
Water Authority Background • Wholesale water agency created by State Legislature in 1944 • 36-member Board of Directors • 24 Member Agencies including Camp Pendleton • Serves 3.2 million people and region’s $188 billion economy • Service Area • 950,000 acres • 97% of county population
1991 28 TAF 5% Increasing San Diego County's Water Supply Reliability through Supply Diversification 2013 2020 550 TAF 95% 71 TAF 11% 103 TAF 13% 80 TAF 10% 80 TAF 13% 44 TAF 6% 27 TAF 4% Total = 578 TAF 56 TAF 7% 21 TAF 3% 103 TAF 16% 190 TAF 24% 27 TAF 4% 46 TAF 7% 297 TAF 46% 231 TAF 30% 48 TAF 6% Total = 645 TAF Total = 779 TAF Metropolitan Water District Recycled Water Imperial Irrigation District Transfer Seawater Desalination All American & Coachella Canal Lining Groundwater Local Surface Water Conservation (existing and additional) TAF=Thousand Acre-Feet
Sources of San Diego County’s Water Supply* LAKE SHASTA LAKE OROVILLE San Diego County currently imports ~70% of its water supply State Water Project (Bay-Delta) 23% Colorado River 51% Local Supplies and Conservation 26% *Based on FY 13 annual reconciliation data
Seawater Desalination as a Resource Strategy to Providing Supply Reliability • New, local water supply • Reduces need for imported water • Drought-proof supply • Improved water quality • More expensive than existing imported supplies • Cost on par with other new, local water supplies • Enhances regional supply reliability and local control
Carlsbad Desalination Project – Under Construction • 50 million gallon per day seawater desalination project • Largest seawater desalination facility in the Western Hemisphere • On-line by early 2016 Site Grading
Carlsbad Desalination Project Mouth of Lagoon Outfall Intake
Carlsbad Desalination Project • Key Permits: • California Department of Public Health Wholesale Drinking Water Permit • California Coastal Commission Coastal Development Permit • State Lands Commission Amendment to Intake and Outfall Lease • Regional Water Quality Control Board NPDES Permit and Waste Discharge Requirements • City of Carlsbad Environmental Impact Report, Precise Development Permit, Redevelopment Permit, Habitat Management Plan Permit, Coastal Development Permit (pipeline), Development Agreement, and Specific Plan Amendment
Major Permit Conditions & Environmental Mitigation • Primary Impacts • Impingement and entrainment associated with ocean water intake when Power Plant no longer operating • Greenhouse gas emissions associated with electricity consumption • Greenhouse Gas Mitigation • Net greenhouse gas impacts from the Project will be offset through implementation of an Energy Minimization and Greenhouse Gas Reduction Plan by Poseidon • Purchase of carbon offsets • Use of most efficient energy recovery and other technology 11
Environmental Mitigation • Marine Life Mitigation • Based on stand-alone operation absent the Power Plant using ocean water for cooling • Coastal Commission requires 66 acres of wetlands restoration as part of compliance with the Commission approved Marine Life Mitigation Plan 12
Carlsbad Desalination Project Delivery System TOVWTP Improvements Pipeline 3 Relining (27,100 feet) Desalination Plant Desal Conveyance Pipeline 10-miles of new 54-inch pipe Aqueduct Connection Facilities
Project Components TOVWTP TOVWTP Improvements P3 relining 5-miles Carlsbad Pacific Ocean New 54-inch steel pipe Pipeline Interconnection Desal WTP 10-miles Encina Power Station San Marcos Pipeline 3 Pipeline 4 14 14
Project Structure – Desalination Plant • Developer/Owner • Poseidon Resources • Construction/Operation of the Plant • WPA between Water Authority and Poseidon • Contractor – Kiewit/Shea Desalination • IDE Technologies is process technology provider • Plant operations and Maintenance also provided by IDE
Project Structure – Conveyance Pipeline • Owner/Operator • Water Authority • Construction of Pipeline • DBA between Water Authority and Poseidon • Contractor – Kiewit Shea Desalination
Carlsbad Desalination ProjectWater Purchase Agreement (WPA) • WPA outlines commercial and financial terms for production and delivery of water • Establishes risk transfer to private developer • Outlines terms of potential purchase of plant by Water Authority • Water Authority Board approved WPA on Nov 29, 2012 • Board initially approved a term-sheet in 2010 as basis for negotiations • Water Authority conducted comprehensive project and financial due diligence effort prior to approval of the WPA
WPA - Ratepayer Protection • Risk Transfer to Poseidon/Contractor team • Permitting • Design liability • Cost overruns • Operation (e.g., if the plant never operates, the Water Authority does not pay) • Water Authority can reject water if it does not meet water quality requirements per the WPA • Price certainty throughout WPA term • Cost increases are specified • Electricity consumption guaranteed by Poseidon • Electricity price is a Water Authority risk • Buy-out provisions after 10 years of operation • Transfer to public ownership at the end of the 30 year agreement
Poseidon ResourcesGeneral Responsibilities • Permit, Design and Build the Desal Plant • Permit, Design and Build the Conveyance Pipeline (design-build agreement) • Own, operate and maintain the Desal Plant • Supply Product Water that meets water quality requirements
Water Authority General Responsibilities • Timely Construction of TOVWTPImprovements and Pipeline 3 Rehabilitation • Own, operate and maintain the Conveyance Pipeline, the TOVWTP Improvements and Pipeline 3 • “Take or Pay” for Product Water if it meets specifications (minimum commitment of 48,000 AF/Year)
Total Project Costs (2012 dollars) Total Capital Cost Total O&M Costs (Plant and Pipeline) $49 - $54 million annually Total Unit Cost1 • 1Includes debt service, operations, Water Authority construction oversight and administrative costs
Project Financing Structure • 82% funded through Bonds issued via the California Pollution Control Financing Authority • Plant Bonds issued as Tax-Exempt Private Activity Bonds with Poseidon as sponsor • Pipeline Bonds issued as Tax-Exempt Governmental Purpose Bonds with the Water Authority as sponsor • Bonds sold on December 24, 2012 • Interest rate 4.78% • 18% Cash Equity from Stonepeak Infrastructure
Price Increases Under WPA • Unit costs set and can only increase consistent with WPA provisions • Annual operating cost increases generally tied to rate of inflation • Price may also increase due to unanticipated changes in law or regulations • Changes generally apply industry-wide • Cannot exceed 10% in single-year or maximum 30% increase over 30-year term • Future intake modifications factored in • Post power plant stand-alone operation • Costs capped at $20 million (2010 dollars)