San Diego approves pact for desalinated water

The San Diego County Water Authority board backed the 30-year deal with Poseidon Resources LLC, which needed it to sell investors on bonds that will finance more than 80 percent of construction of the $984 million project. The plant in Carlsbad is designed to produce 50 million gallons of highly purified drinking water a day, enough to supply about 8 percent of the region in 2020.

The agency will pay $2,042 to $2,290 for an acre-foot of water, more than twice what it cost to bring water from Northern California and the Colorado River on hundreds of miles of aqueducts. But backers of the project say the premium is well worth the protection it provides against drought and predict the price differential will diminish over time. The region imports about 80 percent of its water.

"It's absolutely critical to our region's water reliability and economic stability. It's another historic step toward making us less vulnerable to drought and the severe competition for water that we import," said San Diego Mayor Jerry Sanders.

The decision was being closely watched, especially in California, where the plant is the furthest along among about two dozen proposals in various stages of planning. Desalination has helped quench demand in Australia, Saudi Arabia and other countries lacking fresh water, but it has been slow to catch on in the U.S.

Peter MacLaggan, a senior vice president at Poseidon, said the Carlsbad plant would likely make it easier for other projects to get approved in California.

"We just need to look closer to home for our future resources, and this is a small toward a long-term transition," he said.

The San Diego agency, which acts as a wholesaler to 24 cities and agencies including the city of San Diego, struck a tentative deal in September with Poseidon, a Stamford, Conn.-based company that also wants to build a huge desalination plant in Huntington Beach, south of Los Angeles. Since then, skeptics have questioned the cost.