sdcta 9.16.2010 desal edited
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Livia BorakAttorney, Coast Law Group
Legal Advisor, CERF
Desalination with a few
grains of salt
San Diego County Taxpayers AssociationTransportation, Energy, Water & Infrastructure Committee
September 16, 2010
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San Diego County Taxpayer
Association
Targeting Waste, Promoting
Efficiency.Mission Statement: The San Diego County
Taxpayers Association is a non-profit,
non-partisan organization, dedicated to
promoting accountable, cost-effective andefficient government andopposing
unnecessary taxes and fees.
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A little background
The Carlsbad Desalination Project is not
fully permitted
Every single project approval is conditional
Poseidon also has an open-ended mitigationrequirement 66 acres of wetlandmitigation for the life of the project
Subject to performance criteria if thosearent met, more mitigation is required
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In litigation
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Background continued
When the power plant goes away,
Poseidon will have to modify the desalplant
This means: changing the intake ordischarge, or more mitigation
New permits will also be required
Once the power plant shuts down..At the very least, every 5 years(NPDES)
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So, who pays for this?
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We do!
The San Diego County Water Authority (SDCWA)
term sheet lays it out The unit price for Poseidons water is:
Based on capital and operating costsAND
Includes any qualifying changes in the
law
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What are these changes in thelaw?
Any new law or amendment to existing law after
the contract date Law includes:
Local, state, or federal laws
Statutes
Codes
Regulations
PERMITS
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But theres more! We know the power plant is going awayat
the latest by 2017
Who pays for the required changes in the
intake, discharge or extra mitigation? We do!
Up to $20 million in capital plus $2.5 million in
operating costs
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Per the term sheet:
In the event the SDCWA does not takethe water it is required to take (56,000AF/year aka all of it) the SDCWA will
nonetheless pay Poseidon a per-acrefoot charge
Targeting waste, promoting efficiency
What if we dont need thewater?
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Whats in it for taxpayers?
$690 million in tax exempt private activity
bonds Thats $30 million/year in taxes CA loses
$350 million MWD subsidy ($250/AF) Passed on in MWD imported water rates
Possibly wholesale energy price for
distribution Passed on to other ratepayers
$780
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Whats the cost of the water?
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Only Poseidon Knows
Food and Water Watch study: $3500
Equinox Center study: $1800 to a high of$2800
Poseidon: $1100 plus delivery charge
$1600 total~$1865
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The risk of the most volatile
parts of the cost are going tobe paid by ratepayers and/or
taxpayersEnergy
Changes in the Law
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Energy
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San Diegos Water Sources:Assessing the Options
The cost of desalinated water is forecast
to rise at a relatively rapid real rateaveraging 4.5% over the time period to2030. Although technological advancescould lower capital and operating costs,
interest and energy expenses are
expected to drive costs up at a significantpace.
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San Diegos Water Sources:Assessing the Options
Equinox Center, Fermanian Business &Economic Institute, July 2010
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San Diegos Water Sources:Assessing the Options
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In reality, we will never probably know or
see how much an individual has made offthe project.
If we were willing to assume risk, wecould get a lot more information, a lotmore transparency. The project isnt
public, the project is privateWe canchoose not to buy this product. Nobodysgot a gun to out heads saying buy at all
costs. - Rincon del Diablo Water District