Closed-door desal deals are the wrong approach.
Thursday, April 15, 2010
In the past two weeks, there’s been a lot of talk about a Regional Project to address the water supply problem on the Monterey Peninsula. In a flurry of activity, the Board of Supervisors, Marina Coast Water District, Monterey Peninsula Water Management District and several other organizations were encouraged to quickly approve a set of agreements that would govern how the proposed project would be implemented.
My dissenting vote on the agreements presented to the Board of Supervisors on April 6 reflects my commitment to informed public participation. Released on the afternoon of March 30, these documents had not been public long enough to give people a chance to read, understand and comment on them. They are long, confusing and contradictory.
As a public representative, I would have preferred to vote on these complex issues informed by an independent analysis of the terms, conditions, costs and assumptions being proposed.
As part of the scheduled Public Utility Commission process, there will be just such a report presented on April 30 by the Division of Ratepayer Advocates, an organization whose job it is to follow, analyze and report on proposals such as this one to ensure fairness to water customers. In fact, the DRA’s initial overview prompted it to write a letter to Peninsula mayors saying, “If implemented, [the agreement] will result in unacceptably high costs, unfair risks, and a lack of accountability to Monterey Peninsula ratepayers.”
We are so close to a workable solution! The best way to honor the hope and the good, solid work that has been invested so far is by ensuring that the agreements are fair to all parties. Unfortunately, the agreements that have been proposed to govern the project’s implementation are not consistent with that spirit.
There are several areas of concern, including who pays for the project, controls on costs, the ratio of fresh water to salt water, and the long-term safety of the Salinas Basin since only theoretical modeling has been done. For now, to illustrate how seriously flawed these agreements appear to be, I will focus on their impact on the water customers in Cal Am’s Peninsula service area.
Desalinated water is expensive. I want to be able to look my neighbors in the eye and assure them that the charges they are paying are truly fair and reasonable. Here are some of the reasons I have concerns that this would not be the case under the existing agreements:
Initial comparisons show that the proposed desal plant is exceptionally expensive for its size. The industry standard for desalinated water is between $1,000 and $2,500 per acre-foot; already the price here is between $4,000 (proponents’ estimate) and $7,500 (DRA’s figure) per acre-foot.
Marina Coast will only pay $149 per acre-foot for its share of water.
All project costs will be passed along to Cal Am customers, including loan repayment defaults by Marina Coast or Water Resources Agency, litigation costs, and all expenses to study and plan for a desalination plant – not specifically this Regional Project. This could allow Marina Coast to be reimbursed by Peninsula ratepayers for the cost of exploring the development of its own desal plant – an idea it’s now abandoned in favor of the regional project. Cal Am customers are already paying for pre-construction costs Cal Am incurred for the Coastal Water Project and alternatives.
There are no cost controls on construction of the project or the price of water under these agreements. Normally, the PUC reviews potential expenses, disallows those it does not find reasonable or customary, and must determine the fairness of any price increases. These agreements declare that the costs are “reasonable” – because Cal Am, Marina Coast and Water Resources Agency say so – and exclude the PUC and the public from the review process.
Virtually all costs will be passed along to Cal Am customers, yet the desal plant and wells will be owned by Marina Coast and Water Resources Agency, respectively.
The agreements lock Peninsula customers into these terms for up to 94 years, with no input or recourse.
The terms and conditions put forth in these agreements, developed behind closed doors, are an example of what can happen when the public is excluded.
The Regional Water Project’s name reflects a spirit of cooperative problem-solving that has gone into the process. Here’s how we can deliver on that spirit and ensure the implementing agreements are fair to everyone:
Write a letter to the PUC expressing your opinion. E-mail firstname.lastname@example.org or fax to (415) 703-2057. Watch for a Division of Ratepayer Advocates-sponsored local opportunity for public participation and attend. Call for governance by a Joint Powers Agency that includes Peninsula representation.