Come Hell or Saltwater
The ocean is probably going to be the Peninsula’s main water supply within six years. Get used to it.
Thursday, June 24, 2010
When you turn on the light, you probably don’t think about global warming, or even the twin 180-foot steam boilers pumping out 1,500 megawatts of natural-gas-fueled electricity (and millions of tons of CO2) just up the highway in Moss Landing. As a resident of the Monterey Peninsula – and we’ll use the term loosely, to refer to the cities of Seaside, Sand City, Del Rey Oaks, Monterey, Pacific Grove and Carmel – you might care about those things, but they’re out of mind when you’re in the kitchen making toast.
Likewise with our water. As long as the tap turns on and runs clear, the source doesn’t take up much head space. Yet our regional water supply is easily the most politically loaded, historically controversial and bureaucratically complicated issue on the Peninsula. And it’s about to change dramatically.
The state water board is finally serious about making the Peninsula’s private water supplier, California American Water, stop sucking the Carmel River into a desiccated steelhead trap – and, for that matter, quit overdrafting the Seaside Basin (the groundwater store beneath Del Rey Oaks, Seaside and Sand City) before it fills with seawater. There go our two main water sources.
If that sounds abstract, try doubling your water bill. Now triple it. It’s not a question of whether the Regional Water Project will blow up your water rate over the next five years, just by what multiplier.
The dollar figures are among the last details still up for discussion as the state Public Utilities Commission prepares to shove the desalination project down the waterslide. After years of state water board orders, local ballot measures, heated op-eds, competing water supply proposals, environmental studies and legal maneuvers, the players have reached consensus on this much: A Regional Water Project, with a big desalination plant north of Marina as its centerpiece, is probably the most feasible solution.
In late March, the project’s stakeholders (or “interveners,” in the PUC’s jargon) unveiled two agreements, negotiated in judge-ordered confidence, that spell out details like who will own which parts of the desal project, who will pay for it and who will oversee it. Right out of the gate, the water purchase and settlement agreements had a diverse squad of signatories, from the eco-centric Surfrider Foundation to the farmer-friendly Monterey County Water Resources Agency, from the Public Trust Alliance to Cal Am.
IT’S NOT A QUESTION OF WHETHER THE REGIONAL WATER PROJECT WILL BLOW UP YOUR WATER RATE OVER THE NEXT FIVE YEARS, JUST BY WHAT MULTIPLIER.
Despite the carefully orchestrated PR blitz, a few critics immediately raised issues of fairness and oversight. The desal project is largely controlled by two public agencies that don’t represent Cal Am ratepayers, they note, but the agreements stick the Peninsula with most of the staggering costs.
Yet even that shrinking pool of skeptics – most notably the PUC’s Division of Ratepayer Advocates and the Monterey Peninsula Water Management District – is behind the desal project itself. Without it, down comes what County Supervisor Dave Potter ominously calls our Sword of Damocles: the state cease-and-desist order that forces Cal Am to incrementally scale back its Carmel River water deliveries until the dreaded moment on Dec. 31, 2016, when the state cuts off about 70 percent of the river’s supply.
If an alternative water supply isn’t in place by then, officials warn, our regional economy will suffocate like a trout in a dry creek bed. We’ve already spent too much time and money looking into dams and alternative desal mash-ups, they say; the Regional Water Project is our only hope.
“With the cease-and-desist order, the people affected are really the working families. They’ll be the ones that suffer the greatest without a water source,” Marina Coast Water District General Manager Jim Heitzman says. “Then the cities and counties will take a hit, and pretty soon you won’t be able to provide services.”
Judging by the official rhetoric, the PUC is likely to green-light Cal Am’s participation in the Regional Water Project by the end of the calendar year – but the details are still open for modification. Public participation hearings in Monterey and Seaside this week offer a rare chance for ratepayers to make their views heard.
Might be a good time to pay attention to your tap water.
In a nutshell, here’s how the proposed Regional Water Project works (see graphic):
• On the coast north of Marina, intake wells run by the Monterey County Water Resources Agency draw brackish water through the sand. The intake is mostly saltwater, but also some freshwater from the Salinas Valley Basin.
• The water is piped to a desalination plant just north of Marina, next to the regional landfill. The plant, owned by Marina Coast Water District, removes the salt and produces 10 million gallons per day of potable water – enough to replace the 8,800 acre-feet per year Cal Am is overdrafting from the Carmel River, plus 1,700 acre-feet per year for future Fort Ord development. It does not produce any extra water for future Peninsula growth.
• The waste brine is pumped through existing pipes owned by the Monterey Regional Water Pollution Control Agency, diluted with treated effluent and discharged into the ocean.
• Most of the plant’s potable water flows through a 10-mile transmission pipeline owned by Cal Am to its Peninsula service area.
• An estimated 16 percent of the product water, corresponding to the amount of freshwater intake, remains in the Marina Coast Water District.
• Meanwhile, additional water captured from the Carmel River during the wet season is stored in the Seaside Basin as part of the Aquifer Storage and Recovery Program.
Heitzman says the RWP has impressed water industry giants nationwide and been described as “the template for all desalination projects.” So he’s surprised the project agreements have met with some skepticism.
“You have the opposition out there who say it’s a very worthy project, and then they present red herrings as to why it won’t work or something,” he says. “You’re baking cookies and all the bakers say they’re really good, and then your mother-in-law says, ‘You put too many chocolate chips in there.’”
The points of contention are actually more focused on how much the cookies will cost, who gets to eat them and who supervises the kitchen.
Here’s where your water bill comes in. Because the water supply is technically Cal Am’s problem (see timeline), its customers are expected to pay for the desal water costs. Proponents recently pegged the bill at $4,000 to $9,600 per acre-foot, including the facilities, pipeline and financing – or a total project cost of $230-$400 million, plus interest.
That’s a wide range, but at least it’s consistent. After the PUC’s Division of Ratepayer Advocates (the folks tasked with protecting you from unfair Cal Am charges) and settling parties (the agencies that signed the project agreements) got into a public spat over their wildly disparate cost estimates, the PUC held cost workshops in mid-May, producing a “unified financing model” to ensure apples-to-apples calculations.
The lingering uncertainty mostly reflects financing wild cards like future market conditions, construction bids and interest rates. Government grants would bring the project cost down, but high interest rates would jack it up.
“There are a lot of different numbers, and they’re all estimates,” says DRA Water Policy Supervisor Diana Brooks.
It’s fairly clear, however, that the project would likely double or triple Peninsula water rates within the next few years. An average family now paying $40 per month for water could expect to pay $80 or even $120 once Cal Am starts passing down the project costs.
Cost confusion is one of the reasons Citizens for Public Water, a project “intervener” and long-term voice for a publicly-owned water supply, hesitated for two months before finally signing the agreements June 9. The group eventually concluded that a Marina Coast-owned desal plant is much cheaper than the leading alternative, a Cal Am-owned desal plant in North Marina.
“I’m forever indebted to Marina Coast for having the courage, willingness and political resolve to take leadership,” says CPW co-convener George Riley. “Otherwise, we’d have no Regional Project. We’d be stuck with Cal Am.”
At the PUC’s evidentiary hearings in San Francisco June 8-11, there was a lot of talk of imposing a cost cap on the project. The DRA pushed for a per-acre-foot price limit, but Cal Am’s people testified that such a cap could push up loan interest rates – or even quash financing prospects altogether. The settling parties made it clear that they’d prefer not to have a cost cap at all, but might be willing to accept a high ceiling on the total capital outlay.
That, at least, could reduce the chance your water bill will quintuple.
Another sticking point: The agreements as currently written would saddle Cal Am ratepayers with de-salted water at gourmet prices, while Marina Coast customers would get the same liquid at a fast-food rates.
The reasoning is a bit complicated. A county law says Salinas Valley groundwater must stay in the Salinas Valley, which includes Marina Coast’s service area. And physics say the brackish water sucked in by the county’s vertical beach wells will be saltwater mixed with some fresh valley flow. Once the Regional Water Project starts pumping, the only way to know the ratio for sure will be to test the saltiness of the intake.
The settling parties say the wells will pull in about 84 percent saltwater and 16 percent freshwater. In that case, 16 percent of the desalinated product will have to stay within Salinas Valley. And since Marina Coast doesn’t need that water yet, the agreements allow the district to pay less than $150 per acre-foot for it – the low-ball cost of pumping Salinas Valley water right now.
“What [Marina Coast] is getting is an assurance that they’ll get that treated water at that price for the next 94 years,” Water Management District attorney David Laredo says.
Heitzman thinks that’s only fair – his agency shouldn’t have to pay a premium for desal water the Peninsula needs. “We don’t want that water,” he says. “It has no benefit to our district.”
But some observers think the deal is a rip-off. Why should Peninsula ratepayers cough up 27 to 65 times more than Marina Coast for the same product?
“Obviously everyone should be paying for the cost of the de-salted water they’re using,” says Keith Vandevere, a county planning commissioner who’s been tracking local water politics for more than 30 years. “There’s no excuse for asking Monterey Peninsula ratepayers to pay for someone else’s water.”
The DRA also thinks Marina Coast should pay its share: 16 percent of the capital costs, or about $1,500 per acre-foot. Brooks points out that even if Marina Coast doesn’t need the water now, it will eventually require 1,700 acre-feet per year to service new developments on the former Fort Ord.
Kristi Markey, a Water Management District board member (who’s also an attorney and chief of staff for Supervisor Jane Parker, the one supe to vote against backing the RWP agreements), brings up a related point. What if it turns out the beach wells are drawing 40 percent freshwater? Then Cal Am ratepayers get even less of the desal water they’re paying dearly for, while Marina Coast gets more dirt-cheap water it doesn’t need.
Heitzman counters: “That’s another red herring. It doesn’t work like that.” The saltwater-freshwater ratio might be a few percentage points off from the projected 84-16 split, he says, but he trusts the models are pretty accurate.
Proponents are already planning to run test wells before construction, but only for as few as three months. The Water Management District wants to see that extended to at least a year.
The question of Salinas Valley water rights relates to another easy-to-ignore, but potentially deal-breaking wrinkle: What if 100 percent of the brackish water intake is technically considered “groundwater”? The saltwater portion originates in the ocean, but by the time the beach wells pump it out, it could be considered a Salinas Valley resource.
That argument is part of an Ag Land Trust lawsuit filed against Marina Coast in April, according to Monterey attorney Molly Ericksen, who represents the trust.
In other words, after all this effort to find a new water supply, a legal ruling could prevent any of the project’s desal water from reaching the Peninsula.
“That’s a huge risk,” Laredo says.
The League of Women Voters of the Monterey Peninsula proposes substituting slant wells for vertical wells, ensuring the intake comes from the sea and not the Salinas Basin.
The final big bone of contention is the apparent lack of representation for the Peninsula residents who need, and are paying for, the Regional Water Project. The proposed agreements allow for no ratepayer participation.
Here’s the logic: The proposed project is a partnership of Marina Coast, the Water Resources Agency and Cal Am. Neither of the public agencies represent the Peninsula, and Cal Am, as a private company, isn’t subject to public review.
The Water Management District – formed in the late 1970s to manage the Peninsula’s water resources – is the closest Cal Am ratepayers have to a public water agency. But even though the district is an intervener in the Regional Water Project, the proposed agreements give it no authority.
The district’s board supports the RWP itself, but it flip-flopped over the question of whether to sign the settlement agreement. First, in closed session, board members voted to sign on. Then, at the request of Chair Regina Doyle, they reconsidered the vote in open session. Doyle changed her vote and the settlement was rejected, 4-3.
In response, the settling parties took out the language giving the district a seat on the project advisory council, leaving Peninsula residents with zero representation in the project.
That gap bothered Peninsula mayors and city managers, who despite their solidarity in favor of the Regional Water Project have been quietly meeting to discuss their lack of a role in its governance. The proposed agreements only give the cities a place on the toothless advisory committee.
“The concern of the mayors and the city managers was that we have no way to represent our citizens,” Carmel Mayor Sue McCloud says. “The prime thing is to provide some adequate representation of the ratepayers, our citizens, so that we can have some say in the project’s making. [If we’re limited to an advisory role], we can just be blown off.”
In early June, the cities of Sand City, Seaside, Monterey, P.G. and Carmel chipped in $2,500 each to hire an attorney and intervene in the PUC’s evidentiary hearings. Meanwhile, McCloud says, the city managers are working out proposed agreement modifications to the effect of putting a Peninsula mayor or two on the RWP’s governing board.
The Water Management District recently submitted some of its own proposed changes, including:
• Make the district a “party” authorized to oversee the desal project;
•Give the district a seat on the RWP Advisory Committee and make the committee subject to open-government law;
• Run the test intake wells for at least 12 months before construction starts;
• And hold the Marina Coast to a long-term commitment to sell Cal Am the desal water. This last point hasn’t gotten much press, but it could affect your great-great-grandkids.
After 34 years, the Water Purchase Agreement automatically renews for 10 years unless Marina Coast tells Cal Am to pursue an alternative, not-more-expensive water source. Marina Coast has that same opportunity to ditch Cal Am every 10 years, until 94 years have passed. At that point, the agreement ends and Marina Coast owns the desal plant outright, with no more commitment to serve the Peninsula.
The Water Management District wants the language changed so Cal Am can keep receiving the desal water its customers are paying for, with or without Marina Coast’s blessing.
The cities share the district’s concern. “Right now you simply have a group of people representing different parties, and they’ve all got a piece of the action,” McCloud says. “In 2044 [when the agreement is due for renewal], Marina Coast could say, ‘We’re going to take all the water and march away.’”
The question of how to power the desal plant – and with what environmental impacts – isn’t spelled out yet. Heitzman hopes to power the plant entirely with green energy from the Waste Management District’s neighboring landfill-gas power plant. But Laredo says the plant could also be powered with old-fashioned natural gas; either option has atmospheric implications.
“There are sustainability problems with desal,” Vandevere says. “Where is that power going to come from? How much global warming pollution is it going to create? And if they start putting caps on carbon emissions, is that going to drive the cost through the roof?”
After decades of hand-wringing over the Peninsula’s water supply, we’re finally close to a solution. A very expensive solution, with democracy and financing leaks, but at least it’s a drought-proof water source designed to end Cal Am’s decades of river and basin overdrafting.
“We’re trading something that may not be great for something better than what we’ve got,” Vandevere says. “I think people don’t have much power over this project. It’s something that’s happening at the PUC and in the courts in San Francisco.”
For the most part, that’s been the case. Following the June hearings, the RWP parties will submit briefs to the PUC in July. Administrative Law Judge Angela Minkin’s decision should come out around late summer, and the commission is expected to make its final determination by the end of the year. The PUC must authorize Cal Am’s participation in the agreements before project proponents can move ahead with final project designs and construction.
So is the Regional Water Project inevitable? Maybe that’s too strong a word, but there’s a lot of momentum behind it.
“I think it’s going to happen in one form or another – it’s just the details,” Laredo says. “The Regional Water Project needs to proceed.”
Minkin, who’s been presiding over the PUC proceedings, is encouraging the parties to work out amendments to make the agreements more palatable.
“Governance and ratepayer protection seem to be really key issues here,” she said June 11, at the end of the evidentiary hearings. “What is being sought here is funding by Cal Am ratepayers… so how can ratepayers be protected? Is a public oversight task force appropriate? Is including the Water Management District as a party… appropriate?”
It’s ultimately up to the PUC to decide the fate of the Regional Water Project. But Minkin has indicated the commission is unlikely to issue a flat-out “no”: More likely, if it’s dissatisfied with parts of the deal, it will propose modifications. If that happens, the settling parties will have to decide whether they’ll accept the changes.
And the upcoming public participation hearings in Monterey and Seaside could be key to influencing those final edits. Minkin underscored that point at the end of the evidentiary hearings, telling the parties:
“It’s really important, now that we’re getting close to a decision point, that Monterey Peninsula ratepayers be given an opportunity to be heard.”