November 17, 2011
Monterey Herald, Monterey, California

Now we're talking billions

Recent Herald commentaries have ignored a truly critical cost comparison among different water supply projects: whether their funding is private or public. That is because of the vast difference in interest rates available to a private or public borrower.

The Monterey Oct. 26 forum concealed this difference by focusing on each project's capital cost rather than the total cost including interest. While Cal Am touted the capital cost of its Marina desalination project as $404 million, this amount jumps to $1.12 billion when you take Cal Am's interest rate of 8.5 percent into account.

That $1.12 billion, not $404 million, is the important figure to keep in mind because it is the amount that ratepayers will actually have to pay if Cal Am builds and owns the project The corresponding amount if a public agency like a city or the water management district finances the project at 3.5 percent is only $653 million, a savings to ratepayers of almost a half-billion dollars.

So, if only for this reason, a public agency must step forward. The cities and the water management district must stop tripping over each other's feet to see who could be last in line. What we need now is leadership!

Ron Weitzman
WaterPlus

Weitzman, who lives in Carmel, is president of WaterPlus.

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