Water Authority Background

Report
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
Increasing San Diego County's Water Supply
Reliability through Supply Diversification
1991
28 TAF
5%
2013
550 TAF
95%
80 TAF
13%
Total = 578 TAF
71 TAF
11%
103 TAF
16%
297 TAF
46%
2020
27 TAF
4%
21 TAF
3%
46 TAF
7%
Total = 645 TAF
103 TAF
13%
80 TAF
10%
190 TAF
24%
44 TAF
6% 56 TAF
7%
27 TAF
4%
231 TAF
30%
48 TAF
6%
Total = 779 TAF
Metropolitan Water District
Recycled Water
Imperial Irrigation District Transfer
Seawater Desalination
All American & Coachella Canal Lining
Groundwater
Conservation (existing and additional)
Local Surface Water
TAF=Thousand Acre-Feet
Sources of San Diego County’s Water Supply*
LAKE
SHASTA
LAKE
OROVILLE
State Water Project
(Bay-Delta)
23%
San Diego County
currently imports ~70%
of its water supply
Colorado River
51%
Local Supplies
and Conservation
26%
*Based on FY 13 annual
reconciliation data
 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
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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
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Carlsbad Desalination Project
Mouth of Lagoon
Outfall
Carlsbad Desalination Project
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9

Key Permits:
o California Department of Public Health Wholesale Drinking
Water Permit
o California Coastal Commission Coastal Development Permit
o State Lands Commission Amendment to Intake and Outfall Lease
o Regional Water Quality Control Board NPDES Permit and Waste
Discharge Requirements
o 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
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
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
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11

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
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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
Encina
Power
Station
New 54-inch steel pipe
Pipeline
Interconnection
10-miles
San Marcos
Pipeline 3
Desal
WTP
Pipeline 4
Pacific
Ocean
Carlsbad
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
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
15

Owner/Operator
 Water Authority

Construction of Pipeline
 DBA between Water Authority and Poseidon
 Contractor – Kiewit Shea Desalination
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



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
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
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
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 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
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 Timely Construction of TOVWTP
Improvements 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)
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Total Capital Cost
Total desalination plant
$537 million
Total conveyance pipeline
$159 million
Financing costs
$227 million
Water Authority improvements and oversight
Total Capital Costs
$80 million
$1.003 billion
Total O&M Costs (Plant and Pipeline)
$49 - $54 million annually
Total Unit Cost
1
56,000 acre feet per year
48,000 acre feet per year
$2,014/AF
$2,257/AF
1Includes
debt service, operations, Water Authority construction
oversight and administrative costs
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
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
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


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)
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