Water board suspends desalination talks

By: GIG CONAUGHTON - Staff Writer | Thursday, January 29, 2004 11:56 PM PST ∞

SAN DIEGO ---- Regional water officials voted Thursday to break off three years of negotiations with a private company to build a $270 million seawater desalting plant in Carlsbad ---- but not before talking about forcing their way onto the proposed plant's site because of a dispute with the company.

San Diego County Water Authority board members voted to suspend talks indefinitely with Poseidon Inc., the company that has been studying building a plant at the Encina Power Plant in Carlsbad that would turn ocean water into drinking water.

Poseidon and the regional Water Authority, which supplies nearly all the water county residents use, have been negotiating to build the plant since 2001.

But talks between the two broke down seven months ago in an increasingly tense dispute revolving around a confidentiality pact and information the Water Authority says it needs to complete an environmental report.

Officials from Poseidon and the Water Authority said Thursday that halting their negotiations would give Poseidon time to see if the company and the cities of Carlsbad and Oceanside could build the plant ----- a project the Water Authority has identified as a critical piece of the county's future water supply.

Partly because California's share of the Colorado River will shrink by 2015, Water Authority leaders say seawater desalination must make up between 6 percent and 15 percent of the county's water supply by 2020.

Poseidon Vice President Peter MacLaggan said after the meeting, "We're pleased that they acted on the recommendation we supported, which was to allow an extended period of time for us to work together with Carlsbad and other member agencies to continue the development of the project."

The board's vote to suspend talks was expected Thursday because the Water Authority's ad hoc desalination committee recommended that action last week.

In a move that was not expected, some board members unsuccessfully lobbied to give Water Authority staff members permission to start legal action in the agency's continuing dispute with Poseidon.

The dispute revolves around a confidentiality agreement, a routine pact that negotiating parties use to protect trade secrets, and environmental information that the Water Authority says it needs to complete an environmental report by December 2005.

The Water Authority and Poseidon, which has a 60-year lease on the proposed plant site at Encina, signed the confidentiality agreement in 2002.

Poseidon officials say that in July 2003, the Water Authority told them they wanted to breach the confidentiality pact. They say Water Authority officials said they wanted to take environmental information and data Poseidon collected at Encina and use it to possibly complete the project without Poseidon.

Water Authority officials, however, say Poseidon is using the confidentiality agreement to bar the agency from ever building a plant at Encina ---- even though the Water Authority studied the idea itself in 1991 ---- unless Poseidon is part of the deal.

"This is not a dispute about documents. Poseidon regards this as a non-compete agreement," Bob Yamada, the Water Authority's Seawater Desalination program manager, told board members Thursday.

Yamada and other Water Authority officials say they need more companies to compete on the project to ensure the public agency gets the best deal for county ratepayers.

The confidentiality agreement contains a clause that would allow the Water Authority free use of the environmental information if it developed it on its own. But the agency would need access to the Encina site.

Poseidon, with its exclusive 60-year lease, has rejected requests for access.

As a public agency, the Water Authority could use its power of eminent domain to get a judge to grant the agency access over Poseidon's objections ---- an action some board members said the agency needed to take because of the importance of the Carlsbad project.

"Our master plan makes desalination our (number one priority), and it seems to me we need to move forward on our environmental impact report. ... That means completing it as soon as possible," said board member and ad hoc committee member Bill Knutson of the Yuima Municipal Water District.

However, noting that staff members said they could continue working on their environmental report for six months without the Encina information, the board overwhelmingly voted down a request that some called a precipitous "first shot in a legal battle."

The board, however, could revisit the request in six months, when staff members are scheduled to report back on the Poseidon-Carlsbad-Oceanside talks.

"We've got six months ... let's don't jump the gun," board member Paul Lewis of South County's Otay Water District said. "It just puts us in a lot more risk than we need to be put in."

Contact staff writer Gig Conaugton at (760) 739-6696 or gconaughton@nctimes.com

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