The Morning Report
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The city of San Diego and the San Diego County Water Authority are closing in on a deal to construct a giant new hydroelectric facility in East County.
Together with a private company, the city and the Water Authority would build what amounts to a water battery.
The project is designed to make money off daily changes in energy prices and provide enough green energy to power 325,000 homes.
The project would cost well over $1 billion, though the two governments involved are trying to shift as much of that cost and risk to a private developer as they can. It would use the existing San Vicente Reservoir near Lakeside and a new reservoir to be built nearby.
The plan is to buy low-priced solar power during the day when it is cheap, and use that electricity to pump water from the existing San Vicente Reservoir uphill to a new, higher-elevation reservoir. When electricity prices rise, water would be released back downhill. As the water falls, it would spin turbines to generate electricity that could be sold at a profit.
Some environmentalists are eyeing the project as a way to help the city meet its goal of having 100 percent renewable energy by 2035, since both the solar energy going in and the hydroelectricity coming out don’t produce greenhouse gases. The Water Authority has also been dipping its toes into the energy market to help control its costs, particularly the cost of desalinated water, which requires a lot of power.
Others, particularly people with property near the new reservoir, could oppose the project because it requires flooding some of San Diego’s backcountry. There are also concerns about exposing the Water Authority or the city to financial risks.
A year ago, several members of the Water Authority’s board were openly skeptical of the project, given estimates that it could cost $1.8 billion and earn back $2.1 billion – a slim margin over two decades. But a year of intense study seems to have persuaded the Water Authority to move ahead, though officials expect to spend several more months negotiating a final agreement.
The Water Authority’s board will vote this week whether to negotiate with its preferred business partner, a joint venture of Nebraska-based Tenaska and Los Angeles-based Diamond Generating Corporation. The Water Authority could also try to work out a deal with an arm of Brookfield, a Canada-based infrastructure company. A few years ago, another arm of Brookfield bought Poseidon Water, the company the Water Authority contracts with to provide desalinated water.
The deals these companies have offered are not yet public or final, but the Water Authority and the city are looking for someone to shoulder as much of the risk and share as much of the reward as possible. To that end, the Water Authority is also voting to approve a $400,000 deal with a law firm to draft a contract meant to look out for the Water Authority and the city’s interests.
A final deal would also require approval of San Diego’s City Council but isn’t expected until spring at the earliest.
Fire Saga Likely to Continue
Last week, California utility regulators turned down San Diego Gas & Electric’s request to raise rates to pay for $379 million in fire damage the company helped cause in 2007. But if you think that’s the end of the story, think again. SDG&E’s parent company has previously indicated it’s likely to challenge the ruling in court.
The timing or nature of that appeal is not yet known, but could revolve around a legal concept in the California Constitution that makes it easy to put power companies on the hook for certain damages. The concept, known as “inverse condemnation,” means that people affected by the 2007 fires were likely to get money from the company even if they couldn’t show the sort of negligence they would have had to show in other sorts of lawsuits. But SDG&E argues the flip side of this legal doctrine is that the company can raise rates to reimburse itself for the damage payments.
Vote Coming on Extending Major Water Deal
On Thursday, the Water Authority will also decide whether it wants to stay in the largest water deal of its kind in the United States, a deal to buy water from farmers in Imperial County. By the end of the year, the Water Authority must decide if it wants to keep buying Colorado River water from Imperial County. Thanks to a contract it signed over a decade ago, the Water Authority has legal right to the water but can’t physically access it without paying another fee to the Metropolitan Water District of Southern California, which owns the only system of pipelines that extends from coastal Southern California to the Colorado River. Earlier this year, the Water Authority lost a long-running court battle to substantially lower those fees.
Right now, the deal with Imperial is set to continue through at least 2047, but the Water Authority has the option this year of ending it a decade earlier. The Water Authority’s senior management has recommended the agency continue buying the water for decades to come. The price of the water is one of the reasons San Diego has some of the highest water rates in the country but it is also an insurance policy during droughts.
Earlier this year, Water Authority officials toyed with the idea of building a pipeline of their own to the Colorado to avoid Metropolitan’s fees, but they have given no indication they have imminent plans to do so.
In Other News
- Speaking of fires, the National Weather Service says conditions are ripe for fires this week in San Diego and across Southern California. The weather agency warns that a combination of strong winds, no rain and warm weather could breed “extreme fire behavior.” There are no signs of rain for the next two weeks or so, which could make this autumn the driest in San Diego since 1929.
- The New York Times has quite a story on a Texas housing developer that brought in dump trucks of dirt to raise the ground above a federally designated flood plain by as little as 1.2 inches. That enticed people to buy the homes, but it didn’t stop the homes from flooding.
- The Supreme Court’s decision not to take up a case involving groundwater rights means a Native American tribe in Palm Springs has won the rights to the water beneath its reservation, the Desert Sun reports. The case has specific and new implications but is part of a general trend of tribes gaining high-priority water rights in the West even though they often lack the infrastructure to use the water. Indeed, much of the water is already being used by cities or farmers. Some tribes don’t intend to take all that water away from existing users but instead want to charge people to continue using it.
Meanwhile, in Germany …
I was in Germany last week for a vacation, and the strangest thing was the top political story: a weed killer.
A German representative to the European Union voted to continue allowing the use of glyphosate. The compound is the key ingredient in chemical giant Monsanto’s weed-killing cocktail Roundup.
Different studies have come to different conclusions about the chemical’s safety, but some consider it a carcinogen, including the state of California.
One of the European papers noted a UCSD study of people living in Rancho Bernardo showed the chemical in the urine of 70 percent of people sampled. The Union-Tribune had a story on that study back in October, but there wasn’t much outcry about a chemical suddenly appearing in most people’s bodies.
But in Germany, the continued use of the chemical threatened to upend the German government. Why? Because Chancellor Angela Merkel was trying to form a new governing coalition and was in search of firm allies. Political parties that we would call liberal balked because they want the chemical banned.
Right now, the American government is on a path of deregulation, so it was a bit jarring to see a government imperiled by the failure to add a new regulation.