1. Carlsbad Desalination Project
Status Update
Bob Yamada, San Diego County Water Authority
Welcome!
5th annual Blue Tech & Blue Economy Summit
Desalination & Clean Water Technologies – Worldwide Industry

2. Water Authority Background
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

3. TAF=Thousand Acre-Feet
Increasing San Diego County's Water Supply Reliability through Supply Diversification
1991
28 TAF %
2013
550 TAF 95%
2020
71 TAF 11%
80 TAF 10%
103 TAF 13%
80 TAF 13%
27 TAF 4%
44 TAF 6%
Total = 578 TAF
56 TAF 7%
103 TAF 16%
21 TAF 3%
190 TAF 24%
27 TAF 4%
46 TAF 7%
297 TAF 46%
231 TAF 30%
48 TAF 6%
Total = 645 TAF
Total = 779 TAF
Metropolitan Water District
Recycled Water
Imperial Irrigation District Transfer
Seawater Desalination
All American & Coachella Canal Lining
Groundwater
Conservation (existing and additional)
Local Surface Water
TAF=Thousand Acre-Feet

4. Sources of San Diego County’s Water Supply*
LAKE
SHASTA
OROVILLE
San Diego County currently imports ~70% of its water supply
State Water Project
(Bay-Delta)
23%
Colorado River
51%
Most of our water currently comes from sources hundreds of miles away.
The exact mix varies from year to year, due to hydrologic conditions both locally and outside of Southern California.
Historically, Colorado River supplies have accounted for at least half of our total supply.
The remainder is made up of local supply projects or offset by water conservation.
*This slide is based on water deliveries. Differences between this and the pie chart slide(based on water use) are based on prior year stored imported water. Previously stored imported water would have come from prior year deliveries, and would have a different CRA/SWP split. This is why water use was not used to calculate annual split.
Local Supplies and Conservation
26%
*Based on FY 13 annual reconciliation data 4

5. Seawater Desalination as a Resource Strategy to Providing Supply Reliability
New, local water supply
Reduces need for imported water
Drought-proof supply
Improved water quality
More expensive than existing imported supplies
Cost on par with other new, local water supplies
Enhances regional supply reliability and local control

6. Carlsbad Desalination Project – Under Construction
50 million gallon per day seawater desalination project
Largest seawater desalination facility in the Western Hemisphere
On-line by early 2016
Site Grading

7. Carlsbad Desalination Project
Mouth of Lagoon
Outfall
Intake

8. Carlsbad Desalination Project

10. Carlsbad Desalination Project
Key Permits:
California Department of Public Health Wholesale Drinking Water Permit
California Coastal Commission Coastal Development Permit
State Lands Commission Amendment to Intake and Outfall Lease
Regional Water Quality Control Board NPDES Permit and Waste Discharge Requirements
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
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 12

13. Carlsbad Desalination Project Delivery System
4/19/2017 3:45 AM
Carlsbad Desalination Project Delivery System
Desal Conveyance Pipeline
10-miles of new 54-inch pipe
Pipeline 3 Relining
(27,100 feet)
TOVWTP Improvements
Desalination Plant
Aqueduct Connection
Facilities

14. Project Components Carlsbad Pacific Ocean San Marcos Pipeline 3
TOVWTP
TOVWTP Improvements
P3 relining
5-miles
Carlsbad
Pacific Ocean
New 54-inch steel pipe
10-miles
Desal WTP
Pipeline Interconnection
Encina Power Station
San Marcos
Pipeline 3
Pipeline 4 14 14

15. Project Structure – Desalination Plant
Developer/Owner
Poseidon Resources
Construction/Operation of the Plant
WPA between Water Authority and Poseidon
Contractor – Kiewit/Shea Desalination
IDE Technologies is process technology provider
Plant operations and Maintenance also provided by IDE

16. Project Structure – Conveyance Pipeline
4/19/2017 3:45 AM
Project Structure – Conveyance Pipeline
Owner/Operator
Water Authority
Construction of Pipeline
DBA between Water Authority and Poseidon
Contractor – Kiewit Shea Desalination

17. Carlsbad Desalination Project Water Purchase Agreement (WPA)
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

18. WPA - Ratepayer Protection
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

19. Poseidon Resources General Responsibilities
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

20. Water Authority General Responsibilities
Timely Construction of TOVWTP Improvements 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)

21. Total Project Costs (2012 dollars)
Total Capital Cost
Total O&M Costs (Plant and Pipeline)
$49 - $54 million annually
Total Unit Cost 1
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
56,000 acre feet per year
48,000 acre feet per year
$2,014/AF
$2,257/AF
1Includes debt service, operations, Water Authority construction oversight and administrative costs

22. Project Financing Structure
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

24. Price Increases Under WPA
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)