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CWA ratifies updated agreement for MWD desal incentive funding

The San Diego County Water Authority (CWA) voted to approve a revised agreement between the CWA, the Metropolitan Water District of Southern California, the Rainbow Municipal Water District, and eight other CWA member agencies for Seawater Desalination Program financial incentives to purchase desalinated water from the future Carlsbad Desalination Project.

The December 17 vote approves the agreement as amended by the Metropolitan Water District. The CWA’s July 23 vote which approved the initial agreement terms was the first of the 11 votes to be taken to ratify the agreement. The CWA would receive a subsidy of up to $250 per acre-foot, which would be passed through to the participating local agencies.

Poseidon Resources, Inc., is building a seawater desalination plant in Carlsbad which is expected to be producing 50 million gallons per day by 2012. In addition to the treatment plant, the Carlsbad Desalination Project will include a storage tank, a pump station, and 13.7 miles of transmission pipelines to deliver the treated water to connection points at member agency facilities and at the CWA’s Second Aqueduct.

Nine CWA member agencies, including Rainbow, have entered into separate long-term agreements with Poseidon to purchase desalinated water produced from the project. The transmission system will deliver desalinated water from the plant directly to Carlsbad Municipal Water District, City of Oceanside and Vallecitos Water District facilities.

Exchange and wheeling agreements will provide the Olivenhain Municipal Water District, the Rainbow Municipal Water District, the Rincon Del Diablo Municipal Water District, the Santa Fe Irrigation District, the Sweetwater Authority and the Valley Center Municipal Water District with water delivered to the CWA’s Second Aqueduct.

“I’m hoping we can get some connections as far north as possible,” said Rainbow Municipal Water District board member Rua Petty, who is Rainbow’s representative on the CWA board.

The proposed Camp Pendleton desalination plant would likely provide a direct connection to Rainbow, but any desalinated water would improve the Rainbow district’s water quality.

“We can blend that water; that will help our ag,” Petty said.

Under the agreement, the CWA will perform certain administrative functions and handle the primary invoicing and reconciliation processes, including the incentive program payments.

In 2001 the Metropolitan Water District board established the Seawater Desalination Program which provides financial incentives of up to $250 per acre-foot for up to 150,000 acre-feet per year produced within the MWD service area. The incentives are provided to offset the cost of producing and distributing the desalinated water.

The nine participating CWA member agencies could receive up to 56,000 acre-feet annually, and over the next 25 years the CWA is expected to receive approximately $350 million which will be passed through to the retail agencies.

In September, CWA staff learned that MWD staff had concerns about the agreement which focused on the accountability and transparency of public funds in the public-private project. The concerns were addressed at MWD’s Water Planning and Stewardship Committee meeting in October. The agreement was discussed by MWD’s Special Committee on Desalination and Recycling in late October, and one MWD member agency manager requested a condition that the agreement would be void in the event of certain changes to the MWD rate structure.

Additional MWD agencies sought that condition, and MWD staff adopted the condition as part of its recommendation. On November 10, the MWD board adopted the agreement with the condition included.

The new conditions terminate the agreement if MWD determines that it will no longer provide incentives or other financial support to member agencies for seawater desalination, water recycling, or groundwater recovery projects through MWD’s Local Resources Program, if MWD decides it will no longer utilize its water stewardship rate or a similar charge to fund the Local Resources Program, the seawater desalination program, or other similar programs, or if MWD includes the water stewardship rate as a charge for all water conveyed on the system.

At least one delegate from a member agency included in such a supply incentive agreement must vote in favor of such an MWD determination for the subsidy agreement to be terminated.

“It’s good news. It would take something very extreme for any of those things to happen,” Petty said. “We can move forward, hopefully, get the thing built.”

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