" - Guest commentary by RON WEITZMAN

 

July 4, 2015  
Monterey Herald, Monterey, California

Guest Commentary

 

Water users looking at high-risk desal project

By Dale Hekhuis and Doug Wilhelm

This is a report on high-level risks that characterize Cal Am's desal project. The report is motivated by the unwillingness of Cal Am and the Regional Water Authority, also known as the mayors group, to discuss and estimate project risk. Mum on risk is their byword.

Our task is to assess three risks:

1. Risks of slant well technology.

Slant well technology is the riskiest element of Cal Am's slant well desal project. Here are our concerns:

Slant well desal systems are unproven. There is no track record for slant well systems that would enable judgments on performance.

Lack of a track record has forced Cal Am and the Water Authority to use the Monterey Peninsula as a test bed for its slant well system. This means system development on the fly, which is costly and uncertain.

Slant wells are more complex than open-ocean intakes, resulting in higher capital and maintenance costs and shorter operating lives.

The company, GEOSCIENCES, that is evaluating Cal Am's slant well technology for purposes of the environmental impact report, is the same company that owns the patent for the slant well evaluation process. This conflict of interest needs evaluation.

Cal Am has been forced to stop slant well trials since the water level in a control well has declined over one foot possibly due to seasonal agricultural usage. This is Salinas aquifer water for which Cal Am has no water rights.

Our conclusion: Cal Am's slant well development project is high risk.

2. Impact of project risk on ratepayers.

During the planning of its 50,000-acre-foot desalination project currently under construction, the San Diego County Water Authority concluded that its ratepayers needed "protection" from project risk. To gain "protection" the Authority negotiated a provision to bar billings of ratepayers for cost overruns. Why can't Cal Am do the same. Because Cal Am shifts expense/risk to ratepayers, away from Cal Am? Since 2004, it has billed Peninsula ratepayers for $107 million in expenses for such matters as a failed desal pilot plant ($12 million), a second failed desal project ($20 million); San Clemente Dam removal costs ($49 million approved for removal of the dam; $26 million approved for pre-construction costs; total of $75 million).

Here is how the expense/risk transfer works. First, Cal Am selects an expense; second, it applies to the California Public Utility Commission for approval of the expense; third, it bills ratepayers for the expense.

Our conclusion: Cal Am ratepayers have no protection from project risk.

3. Risky project forecast.

Cal Am has already incurred four years of project delay and now forecasts completion in late 2018 through mid-2019. The best way to forecast the future is to look at the past. Given the delays to date, it is conservative to forecast an additional two years of delay, meaning start of water production by late 2020 through mid-2021.

In addition to the above risks, there are several risks that could delay commercial production even further: water rights in the Salinas aquifer, brine disposition in the Monterey Bay National Sanctuary and passing the California Coastal Commission permitting process.

Our conclusion: Cal Am water users face extraordinarily large risks.

Risk is critical for judging the safety of project investments and for signaling project success/failure. Keeping silent on risk is not a road to be traveled by either Cal Am or the Peninsula Water Authority.

- Dale Hekhuis is a former chairman of the Monterey Peninsula Water Management District. Doug Wilhelm is a member of Public Water Now

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