Election 2020 Shock: Study Proves Poseidon’s Greed is the Need for HB Desal Plant

By John Earl
Surf City Voice

A recent but little-noticed study of the “financialistion” of Poseidon Resources’ giant ocean desalination plant in Carlsbad, an identical twin to its proposed Huntington Beach desalination project, reveals the company’s scheme to make profits for itself and investors on the backs of Orange County ratepayers.

The study, “Financialising urban water infrastructure: Extracting local value, distributing value globally,” written by Michael Pryke and John Allan at the Open University, UK, was published in 2019 in Urban Studies Journal.

Poseidon’s $1 billion Carlsbad desalination plant, which opened in 2015, was “something of a development in the consolidation of urban infrastructure as a financial asset class,” the study found, “or more specifically in the ability of financial intermediaries to extract value from illiquid assets by turning them into liquid forms.”

The study follows 20 years of failure by Poseidon or its lead agency, the Orange County Water District (OCWD) to provide any evidence of the need for its proposed $1 billion Huntington Beach ocean desalination plant.

OCWD manages the groundwater basin that provides 75 percent of the drinking water to 2.4 million residents in north Orange County.

At Poseidon’s last permit hearing (Aug 7) before the Santa Ana Regional Water Quality Control Board (SARB), there was a lot of discussion about need spurred by board member William von Blasingame’s insights.

Blasingame was perplexed by the inability of OCWD’s Chief Engineer, John Kennedy, to articulate a need for the project.

Blasingame told fellow board members that when he asked, “Do you need the water from this project,” Kennedy answered, “No. We don’t need it. We just want it because we’ve come up with a strategic plan.”

Since 2013 a Poseidon-backed coterie of OCWD board members led by Cathy Green (she is being challenged in Election 2020 by Poseidon opponent/candidate Michael Elliot for her seat on the board) has brazenly refused to study environmentally friendly and less expensive project alternatives while working secretly and illegally with Poseidon to push the project along ASAP.

Green, who might also be considered a liquid asset, has received $35,580 worth of support from “independent expenditures” by Poseidon and another $39,944 from Poseidon friendly PACS, including Engage OC and Atlas.

Blasingame’s doubts were based largely on a landmark study conducted by Karl Seckel, the District Engineer and Assistant General Manager at the Municipal Water District of Orange County (MWDOC).

In 2018 Seckel produced the Orange County Water Reliability Study that examined Orange County’s water supply needs into 2050 and compared alternatives for meeting those needs, including Poseidon’s HB project.

Seckel’s reliability study concluded that “the need for additional water supplies for the OC Basin is fairly small,” occurring once in every 20 years, and that a 10 percent water cutback during such times would fill the supply gap.

The study compared eight water reliability supply alternatives for filling that gap, including the Poseidon project, which was ranked a distant last in every scenario.

Blasingame was booted from SARB by Gov. Gavin Newsom and replaced by a labor-backed newcomer who is less likely to question the desalination project’s need, thus increasing Poseidon’s chance of going forward.

If Poseidon manages to get its permits from SARB and then the California Coastal Commission, it will be up to the OCWD and MWDOC to decide if there is a need or desire for its project (the complexities of that arrangement are described in my endorsement of Seckel for a seat on the MWDOC board).

SETTING THE PRICE

Based on non-subsidized desalination-water-rates at Poseidon’s identical and operational plant in Carlsbad ($2,600/AF for 2019-2020, estimated $2,800/AF for 2020-2021), and after factoring in a $399 million subsidy for the HB plant, OCWD would pay $2,600/AF if the Huntington Beach plant were operating today.

That compares to $875/AF (including MWDOC’s add-on charges) for untreated MET water (cleaned by ground filtration and ultra-violet treatment) that OCWD buys to replenish the groundwater basin, and $1,202/AF for the purchase of fully treated MET water that goes directly from MWDOC to OCWD’s member agencies.

OCWD would have to purchase all 56,000/AF for 30 – 50 years regardless of need, according to terms previously stipulated by Poseidon.

The combination of inflated water rates, the stability of publicly owned water infrastructure, and a 30 – 50 year guarantee on returns, adds up to a great deal for Poseidon and its investors, according to the Pryke/Allan study.

FINANCIALISING OCEAN DESALINATION IN CARLSBAD

In Carlsbad, the Poseidon desalination plant was broken down into “financial qualities” or “liquid assets” that were structured “as a series of interest payments, dividends and capital gains built into the price of water for San Diego households over the next 30 years” in order to “generate value for bond and equity investors in the USA and further afield.”

Left out of Poseidon’s great investment opportunity, the study notes, are the San Diego ratepayers who are “effectively funding a local capital arrangement which globally benefits others elsewhere.”

You can see exactly who benefited from Poseidon’s Carlsbad ocean desalination plant from the graphics below.