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Though the San Diego County Water Authority in 2006 rejected a partnership with the private developers of the proposed Carlsbad desalination plant, the two may end up having a financial relationship after all.
The D.C. Bureau, a nonprofit news service, examined the proposed Carlsbad desalination plant, noting that Poseidon is asking the authority to provide a $24 million subsidy. And the story notes:
In an even thornier request, Poseidon is now also asking the San Diego county authority to serve as a backstop if [the Metropolitan Water District in Los Angeles] ever cancels its far larger subsidy. That is a real possibility because of a separate fight between the two agencies over high water allocation prices. The county agency is extremely unhappy with what they see as unfairly high water rates being charged by the wholesaler and has already threatened to sue. If they do, the incentive program automatically dies.
Bond underwriters have zeroed in on the potential loss of $350 million, water district officials said. Those officials are on pins and needles and working hard behind the scenes to get the regional water authority to agree to fork over the $350 million, if necessary.
“Without the guarantees from the water authority, there won’t be the financing, and there won’t be a project,” said Gary Arant of the Valley Center Municipal Water District, which hopes to buy 20 percent of its water supply from the Carlsbad plant.
And the story sheds light on the plant’s true cost. The company long said it would cost $350 million. The story says:
“We’ve always proposed that it will be privately financed. There’s no public subsidy for the construction of the desalination plant,” said Scott Maloni, a spokesman for Poseidon, which is based in Stamford, Conn.
But dozens of interviews and a review of available records by the Public Education Center’s DCBureau.org shows that while private equity and bonds would be used for upfront construction, southern Californians would pay at least $640 million over 30 years for the project, including as much as $374 million in public subsidies. All that money would repay construction costs with interest, operating costs with overhead fees, and unspecified profits to investors for what would be the largest desalination plant in the Western Hemisphere.
For background, you can watch this explainer on the desalination push in Carlsbad.
View more news videos at: https://www.nbcsandiego.com/video.
— ROB DAVIS