5th annual Blue Tech & Blue Economy Summit Desalination & Clean Water Technologies – Worldwide Industry

Carlsbad Desalination Project

Status Update

Bob Yamada, San Diego County Water Authority

• 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

Water Authority Background

Increasing San Diego County's Water Supply Reliability through Supply Diversification

Metropolitan Water District

Imperial Irrigation District Transfer

All American & Coachella Canal Lining

Local Surface Water

Groundwater

Conservation (existing and additional)

2013

1991

Total = 645 TAF

Recycled Water

297 TAF 46%

46 TAF 7%

21 TAF 3%

27 TAF 4%

80 TAF 13%

103 TAF 16%

550 TAF 95%

28 TAF 5%

2020

Total = 779 TAF

231 TAF 30%

48 TAF 6%

27 TAF 4%

44 TAF 6%

103 TAF 13%

80 TAF 10%

190 TAF 24%

56 TAF 7%

Seawater Desalination

Total = 578 TAF

TAF=Thousand Acre-Feet

71 TAF 11%

Sources of San Diego County’s Water Supply*

LAKESHASTA

LAKEOROVILLE

State Water Project

(Bay-Delta) 23% Colorado River

51%

Local Supplies and

Conservation 26%

San Diego County currently imports ~70% of its water supply

*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

Seawater Desalination as a Resource Strategy to Providing Supply Reliability

5

Cost on par with other new, local water supplies

Enhances regional supply reliability and local control

• 50 million gallon per day seawater desalination project• Largest seawater desalination facility in the Western

Hemisphere• On-line by early 2016

Carlsbad Desalination Project – Under Construction

6Site Grading

Carlsbad Desalination Project

Outfall

Intake

Mouth of Lagoon

Carlsbad Desalination Project

8

9

Key Permits:

Carlsbad Desalination Project

10

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

 

11

Major Permit Conditions & Environmental Mitigation

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

11

12

Environmental Mitigation

12

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

Carlsbad Desalination Project Delivery System

Desal Conveyance Pipeline10-miles of new 54-inch pipe

Pipeline 3 Relining (27,100 feet)

TOVWTP Improvements

Desalination Plant

Aqueduct ConnectionFacilities

Pacific Ocean

Encina Power Station

Desal WTP

Carlsbad

San Marcos

TOVWTP

Pip

elin

e 4

Pip

elin

e 3

P3 relining5-miles

New 54-inch steel pipe

10-miles

Pipeline Interconnection

TOVWTP Improvements

Project Components

141414

Developer/Owner◦ Poseidon Resources

Construction/Operation of the Plant

Project Structure – Desalination Plant

15

◦ WPA between Water Authority and Poseidon

◦ Contractor – Kiewit/Shea Desalination

◦ IDE Technologies is process technology provider

◦ Plant operations and Maintenance also provided by IDE

Project Structure – Conveyance Pipeline

Owner/Operator Water Authority

Construction of Pipeline DBA between Water Authority and Poseidon Contractor – Kiewit Shea Desalination

16

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

Carlsbad Desalination ProjectWater Purchase Agreement (WPA)

17

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

WPA - Ratepayer Protection

18

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

Poseidon ResourcesGeneral Responsibilities

19

Timely Construction of TOVWTPImprovements 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)

Water Authority General Responsibilities

20

Total Capital Cost

Total O&M Costs (Plant and Pipeline)$49 - $54 million annually

Total Unit Cost 1

Total Project Costs (2012 dollars)

21

56,000 acre feet per year 48,000 acre feet per year

$2,014/AF $2,257/AF1Includes debt service, operations, Water Authority construction oversight and administrative costs

Total desalination plant $537 million

Total conveyance pipeline $159 million

Financing costs $227 million

Water Authority improvements and oversight

$80 million

Total Capital Costs $1.003 billion

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

Project Financing Structure

22

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)

Price Increases Under WPA

24