The Progressive Case for the Poseidon Desal Plant in HB

See the Simpson’s meme above where Bart complains about this summer being the hottest of his life while Homer chimes in to say it will be the coldest of the rest of Bart’s life.  And coverage of the heatwave, wildfires and drought-like conditions – along with Governor Gavin Newsom’s call for everyone to cut water consumption by 15 percent – is simply depressing.  Yesterday’s front page of the LA Times showing Lake Oroville down to 33 percent capacity is simply stunning.

Evidence of climate change is stark even for those who deny it.

Sunday’s Los Angeles Times showed Lake Mead is at 36 percent capacity.  The Stevens Creek reservoir in Northern California is at 17 percent capacity. Lake Oroville is at 33 percent capacity; it was at 41 percent capacity just last month.

The planet is about 70 percent water.  And without using Google, how much of that is fresh water?

Only 3 percent.

And 2.5 percent of the planet’ fresh water is not available meaning we have less than one half of one percent as available fresh water.   One half of one percent of the world’s water is available for drinking, bathing, washing, irrigation, agriculture…..that’s it.

Our options for available fresh water are running dry.  It’s not a question of if, but rather when.  And if low-cost affordable water is a human right, water is still a natural resource subject to the laws of economics.  When demand outpaces supply, the price of water  goes up.  And because water is essential for agriculture, your grocery bill is going up.  Hydro-electrical power is will also go up.  Conservation only gets us so far.  Repairing water infrastructure to reduce waste via leaky pipelines only gets us so far.  Developing critical infrastructure to capture rain water runoff carries a high price tag.  Our population continues to grow (San Diego County expects to add one million new residents by 2030).

It’s time for environmentalists, government leaders, and senior management from Poseidon to come to the table and make the desalination plant in Huntington Beach a reality. Compromise on all sides is needed.

Will this desal plant affect the marine life environment?  Of course it will.  But no worse than the wildlife dependent on the fresh water from drying-up resources.  Desalination technology is currently used in more than 21,000 locations worldwide.  Time to add OC to the list.

Poseidon’s Carlsbad plant took about three years to build so even if the HB plant construction began tomorrow, the build out puts us at mid-decade at best.  There are environmental concerns for the neighborhoods located near the desal plant, just as there were for procurement of oil in the area.

Carlsbad has been online since 2015 and the required mitigation still has not been constructed due to delays in state permitting.  Guaranteeing that the HB desal plant mitigate for a period commensurate with its operating life has to be a chip on the table for our government leaders to leverage before agreeing to let the plant move forward. But it’s time to cut the red tape.

The people who complain the loudest about Poseidon’s investors making money on this plant really don’t seem to understand the high cost of developing this type of facility.  If water ratepayers were to fund the development of a public desal plant, the increase in rates to do so would likely hit hundreds of dollars per household per year for 30 years or more.   Water from the desal plant in HB will not triple the price of water; the price didn’t triple in Carlsbad.

Poseidon will fund the HB project through the capital markets and contributed equity, with private investors taking on the risk associated with the project from design through operations.  And assuming risk doesn’t guarantee profits.  Investors could still lose their shirts.  The price of the water will be locked in before the plant is built and the facility reverts to public ownership after the 30-year water purchase agreement expires.

The bonus would be lots of building/trade union jobs for at least three years or longer to get the plant done and online. These projects require lots of long-term capital investment and years of co-operation with municipalities to create public-private partnerships.

The HB Plant would be financed and constructed at no expense to local water agencies or any other governmental entity.

Will investors make money?  Probably, and that’s not a bad thing because their seed investment fills a critical infrastructure need for long-term drinking water supply that can get us through any drought. And ratepayers will still pay less than if we used tax dollars to do the exact same thing.

The California Coastal Commission staff is demanding guarantees that Poseidon complete required environmental work before operations and that isn’t unreasonable to request of the company at all. And these environmental measures will certainly make water more costly than what we’re paying today, but averaging out the addition of desal to conservation and other measures, the average household water bill is likely to increase by $5 or so.  Your water bill will go up.  So will mine.  And since the first of the year, you’re playing a lot more to fill your gas tank.  Your grocery bill is probably higher.  Want to buy a car?  New car prices are up due to a shortage of chips.  Rents are higher.  Home prices are soaring.  But we’re going to complain about an extra $5 a month?

Opponents continue to use a 2016 County report that says our current water needs will be met without desal until 2056. A lot has changed in the five years since this water needs report came out.  After reading story after story about water resources evaporating before our eyes, I don’t think we can wait until 2056 to address our water crisis.

In the 1970s, the air pollution in Southern California was horrible.  Good environmental policies changed this dramatically. Smog hasn’t disappeared but to can see the LA Skyline and actually breathe the air.  I’m hopeful measures for managing climate change can reduce the crisis in our fresh water supply chain.  But we need to consider everything – including desal water.

If you saw the movie, “The Big Short,” about how investor Michael Burry bet against the housing market leading to the 2008 financial/housing/mortgage crisis, he’s turned his attention to water.  From BusinessInsider, this:

The investor has recognized that the world’s water supply is under pressure and that prices are set to rise. Rather than simply buying water sources and then flogging the liquid at inflated prices, Burry has taken a different tack.

“What became clear to me is that food is the way to invest in water,” Burry told New York magazine in 2015. “That is, grow food in water-rich areas and transport it for sale in water-poor areas. This is the method for redistributing water that is least contentious, and ultimately it can be profitable, which will ensure that this redistribution is sustainable.”

Burry’s strategy has led him to invest in water-thirsty crops such as almonds, which require more than a gallon of water each to grow, and he looks set to profit from soaring demand for plant-based milks.

California is no longer a water-rich state and a significant chunk of our economy is tied to agriculture.  Desalinated water for irrigation is needed. It can be a critical part of our daily lives.

So lets find a way for the Coastal Commission, county leaders and Poseidon’s management team to find compromises to make this resource work for everyone.