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Tuesday, June 20, 2006 | Last Tuesday, Carlsbad’s City Council approved Poseidon Resources Corp.’s plan to build a plant to convert 50 million-gallons-a-day of seawater into drinking water.
This Thursday – nine days later – the San Diego County Water Authority will be considering whether to approve its own plan to build a similar desalination plant at the same location.
The two desalination projects have the potential to provide local residents with a drought-free drinking water supply, producing enough water to supply more than 100,000 homes.
They have proceeded on parallel tracks for years. Each party has had its own negotiating strength. Poseidon holds the lease to land at the Encina Power Station considered vital to the project. The authority, meanwhile, has the necessary customer base and the infrastructure to deliver the water.
While each project has moved forward, Poseidon and the water authority have been negotiating to see who would build, operate and own the plant. The two sides haven’t been able to reach an agreement during their on-again, off-again negotiations. Their most recent round of negotiations kicked off in April 2005. What separates them? No one will say. The two parties are bound by the terms of a confidentiality agreement.
Poseidon has long been one step ahead of the water authority. Its environmental impact report had been close to approval in Carlsbad months ago. But it was delayed, approved only last week. If the water authority approves its environmental impact report Thursday – in the works since 2003 – the projects will be running even. So is the water authority’s timing coincidence? Or calculation?
Some say coincidence.
The authority has been slowly working to develop desalination as a water source, said Michael Shames, executive director of the Utility Consumers Action Network, a San Diego-based utility watchdog. He describes Poseidon not as a competitor with the authority, but as a “jilted paramour.”
“I don’t see that they’re trying to squeeze Poseidon out,” Shames said of the authority, “but they’re looking at [Poseidon] as a disinterested suitor. … The water authority is just going on trying to find the best match that it can.”
Some say calculation.
“Clearly with Carlsbad approving, they want to move as quickly as possible,” said Steve Erie, director of the Urban Studies and Planning program at the University of California, San Diego. “I think it has a lot to do with the fact that the Poseidon project is starting to go through the regulatory planning and permitting hurdles. They’ve got to start jumping through these hurdles, too, otherwise they do lose bargaining leverage.”
Carlsbad planning officials have protested the authority’s environmental review, sending the water agency a 13-page letter last month bemoaning a lack of cooperation. It detailed 54 issues ranging from aesthetics to height limits and asked for a delay that was not fully granted. This comes from a city government that points to a deal between the water authority and Poseidon as an ideal resolution to the region’s desalination hopes.
Ken Weinberg, the authority’s director of water resources, dismisses claims that the authority is fast-tracking its $1.8 million environmental review to compete with Poseidon. He said he doesn’t view the two tracks as being competitive.
“We’ve been working on this before Carlsbad started on their [environmental impact report],” Weinberg said. “It just sort of worked out that they lined up the way they did in terms of completion and approval.”
Peter MacLaggan, Poseidon’s senior vice president, said the two plans have the potential to be competitive. He declined comment about whether the authority’s environmental review would affect either party’s bargaining leverage.
Poseidon’s plan still faces one major hurdle: the California Coastal Commission. Environmentalists say that’s the step in the permitting process where they hope to see an independent examination. The commission regulates land use along the coast.
Weinberg says Poseidon’s project would have an easier time with the commission if the authority were involved. The commission has stated that Poseidon’s private control of water, a public resource, will be an issue, he said.
“They’re looking for public agency involvement,” he said. “Does that mean it can’t get through? No. I think it’s just going to have a tougher time.”
Poseidon could assume that risk and proceed without the authority, building the plant and selling the water to local water agencies. Three have agreements with Poseidon, but the water that would be produced by the plant hasn’t been fully sold.
If the authority and Poseidon were able to reach an agreement, the private company could have access to the water authority’s infrastructure, which reaches more than 3 million residents in the region.
The authority’s power of eminent domain also remains on the horizon. UCSD’s Erie called that “the nuclear option.” Weinberg acknowledged the possibility, but said the authority is focused on negotiating a solution rather than trying to take the land through government action.
“That’s an inherent power of government,” he said. “But I think we’ve been trying to negotiate to get to where the best arrangement is for everybody. But that’s a power that any public agency has.”