PUC approves $300 million Monterey Bay desalination project
Monterey Bay: PUC approves plant on 4-1 vote
Jim Johnson
Monterey County Herald
12/03/2010
Clearing a major hurdle, the proposed Peninsula regional seawater desalination project earned the nod from the state Public Utilities Commission.
The PUC on Thursday approved by a 4-1 vote the $300 million project as proposed by a public-private partnership including California American Water, which applied for the permit.
Cal Am is teaming with the Monterey County Water Resources Agency and the Marina Coast Water District on the project, which includes a desalination plant north of Marina designed to produce 10,500 acre-feet of potable water per year as a replacement source for Peninsula customers facing a state-ordered cutback in pumping from the Carmel River.
Under the proposal, the county Water Resources Agency would own and operate the water source wells, which would pump brackish water to the desalination plant to be owned and operated by Marina Coast.
Cal Am would pump the potable water to its Peninsula customers, who will pay for most of the cost of the project through increased water bills, which would be expected to at least double over current levels.
The PUC's approval is considered one of two major milestones for the project, which must be OK'd by the state Coastal Commission. That body could consider the project by December 2011.
The PUC will determine rates associated with the project in a future proceeding.
With their vote, the commissioners chose to reject a series of modifications to the project agreement proposed by an administrative law judge overseeing the bid. Judge Angela Minkin had called for tighter project cost caps and more extensive public oversight.
Commissioner John Bohn, who oversaw the project bid, had proposed changes to the agreement but reversed himself with Thursday's vote.
The main project proponents had flatly rejected any changes.
Only Commissioner Dian Grueneich dissented Thursday, siding with Minkin's proposed changes and accusing the commission of abdicating its oversight responsibilities. Grueneich's position was echoed by the PUC's Division of Ratepayer Advocates.
In his comments during and after Thursday's hearing, Bohn indicated he was convinced by the main project proponents and other backers that the agreement offered adequate measures for oversight and cost controls. He said that the public agencies involved in the project partnership are subject to public scrutiny, which would help ensure reasonable project costs and fair rates for Peninsula customers.
Conversely, Bohn said he had been convinced that Minkin's suggested changes would serve as a "red flag" to investors willing to back the project, making it more expensive or impossible to finance.
"I think what was clarified in my mind was there was community support" for the original project agreement, Bohn said. "There was overwhelming public support. There was a willingness to work together that has historically never happened before."
Bohn, whose term on the commission ends this year, said he believed those involved with the project wanted a decision before he and Minkin, who is slated to retire at the end of the year, leave their posts because it would have taken so long for their replacements to get up to speed on the complex proposal.
Cal Am President Rob MacLean said the approval was "a good day for the Peninsula."
"We're happy," MacLean said, noting that design and engineering work can now get under way. "Now the real work starts."
County Water Resources Agency general manager Curtis Weeks called the approval a "good step forward for the entire community and the Carmel River."
A number of area residents spoke at Thursday's meeting in favor of the project agreement, including representatives of the Monterey County Hospitality Association, the Carmel River Conservancy and community advocates.
Monterey City Councilwoman Libby Downey spoke in favor of Minkin's proposed changes.
Division of Ratepayer Advocates supervisor Diana Brooks blasted the commission's decision as unfair to Peninsula customers, who she said will bear the brunt of cost overruns without a real say in the project.
"We were dismayed," Brooks said. "We're really disappointed that the commission didn't adopt the safeguards that (Minkin) had in her decision and Commissioner Bohn had in his initial decision. I don't see the ability of ratepayers, even through their elected county officials, to influence the direction of the project."
Brooks said Division of Ratepayer Advocates officials would consider their options, including a possible appeal.
In a press release, the Division of Ratepayer Advocates warned that Peninsula customers could suffer "rate shock" if project costs soar without adequate cost controls.
