Dana Point Ocean Desalination Project

Project UpdateMay 2007

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Summary Construction of a 15 million gallon per day Dana Point

Ocean Desalination plant using a slant well subsurface intake facility to produce about 16,000 AF per year is FEASIBLE

Project cost = $136 million Cost of water = $1287 per acre foot The project is sensitive to environmental issues and

supported by Surfrider Foundation and others Work completed is of benefit to the San Juan Groundwater

Basin

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Dana Point

Ocean

Desalination

Project

FacilityLayout

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Dana Point Ocean Desalination Plant

15 MGD meets about half of the 2025 water demands for Laguna Beach, San Clemente and South Coast WD

For all eight SOC agencies, demands are currently about 115 mgd; meets about 13% of demands Dana Point Ocean

Desalination Plant Service Area

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What we want from you?

Understanding of project potential and risk Info needed to enable decision by local

agencies to move project forward Interest in forming a JPA to move the

project forward

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Why Ocean Desalination? Supply Reliability

New dependable potable water supply source Independent of hydrologic cycle Consistent with MET’s IRP Delta export risks (Earthquakes, Fisheries) Climate change Threats to import supplies

System Reliability Local supply under local control Supply at end of distribution system Emergency supply at constant delivery rate

MET Funding

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Challenges to Water from Northern California

San Francisco Bay/ Sacramento - San Joaquin River Delta Hub of State’s water system Degraded ecosystem/fishery Vulnerable levee system Peat soils/drainage – DBP

precursors Climate change, flood and

water supply impacts

StateWaterProject

Los Angeles Aqueduct

Sacramento

Colorado River Aqueduct

Los Angeles

DeltaDeltaSan Francisco

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SacramentoSacramento

StocktonStocktonBayBayAreaArea

Sherman Island

Holland Tract

Webb Tract

Jones Tract

McDonald Tract

New Hope

Tyler

Venice

Brannan Island

Historical Island Flooding (since 1960)

Historical Island Flooding (since 1960)

162 Delta levee breaches have occurred in past century

162 Delta levee breaches have occurred in past century

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Challenges to Waterfrom the Colorado River

Growth in other basin states

Over allocation Climate change,

extended drought Mexico claims Salinity and water

quality

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Dana Point Ocean Desalination Site

Diemer Filtration Plant

Imported water = 95% of potable supplies

Single water treatment plant and two pipelines serve more than 500,000 residents and businesses

Few local resources Emergency outage of

the import system could cause significant economic problems

South Orange County

Challenges

South Orange County

Challenges

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Multi-year investigations 2002 proposal to MET to preserve $250 per AF

incentive for 28,000 AF ($174 Million) 2005 test borings determined depth and verified

highly permeable alluvium at shoreline 2006 test slant well demonstration project 2006 SOCWA Outfall Capacity Study 2007 SDG&E electrical service study 2007 Groundwater modeling results: 30 mgd ocean

intake is feasible to produce 15 mgd of potable water Drawdown impacts to South Coast wells can be mitigated

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Test Slant Well

Test Slant Well Drilling Site Test Slant Well Drilling Site

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Test Slant Well Schematic

Ocean SurfaceLand Surface

Fres

h W

ater

325 feet

Test Slant Well

Infiltration

Drill Rig

Ocean Bottom

Main Aquifer 40 to 130 feet ±

Salt

Wat

er

23o 350 feet ±

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Subsurface Slant Well Intake System Advantages

Avoids ocean impacts from construction and entrainment/impingement

Provides pretreatment benefit and shock load protection against red tides, storms, etc.

Functions as a ocean water intrusion barrier Cost-effective technology and potential lower life-

cycle costs compared to conventional intake systems

Work to date supported by environmental organizations Letter of Support from Surfrider Foundation

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Drilling Site on Doheny Beach

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Dual Rotary Drill Rig Test Slant Well

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Testing Set Up

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Dual Rotary Drill Rig

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Welding Screen Joints

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Desalination Plant SiteFeedwater Feedwater Supply FacilitiesSupply Facilities

Subsurface Slant Wells and Buried Collector Intake System

SOCWA Outfall

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Key Findings from Engineering Feasibility Report - 1

Project Sized at 15 million gallons/day (MGD) Distribution of water to South Coast, San Clemente,

San Juan Capistrano, MNWD and Laguna Beach is FEASIBLE

Subsurface intake system is the lowest cost and least impacting feedwater supply option

Makes good use of existing facilities Concentrate disposal capacity available in SOCWA Ocean Outfall System integration is straightforward

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Key Findings from Engineering Feasibility Report - 2

Subsurface water is naturally filtered; treatment before reverse osmosis membranes is not necessary – saves $30 million capital and $50 million life cycle

Groundwater Modeling predicts low iron and manganese levels – treatment not needed

Extended pump test and pilot plant is necessary to verify findings and to complete check on groundwater modeling work

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Key Findings from Engineering Feasibility Report - 3

Capital Cost Estimated Base Cost $104 M Contingency Allowance $32 M

Total Budgetary Cost $136 MO&M Cost Energy Purchases $7.0 M/yr Other O&M Costs $4.7 M/yr

Total O&M Cost $11.7 M/yr

Notes: (1) Electrical energy at 11.5¢ (SDG&E applicable rate) (2) Land and site preparation in contingency

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Unit Project Costs

Project YieldCapacity at 15 MGDYield at 95% Load Factor = 15,962 afy

Cost Per Acre-Foot of Yield(1)

Capital $552/afEnergy $438/afO&M $297/af Total $1287/af

Notes: (1) i = 5%, n = 30 years (2) Electrical energy at 11.5¢ (SDG&E applicable rate) (3) Land and site preparation in contingency

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Project Costs vs Future MET Treated Water Rate

How do future projected MET treated water rates compare with the ocean desalination project costs MET rates are anticipated to escalate at 4% to 6%

per year for next 10 years Projected rates beyond 2016 are subject to many

issues – CALFED (Delta fix), replacement and refurbishment costs, power costs, environmental mitigation, etc.

Hard to predict future MET rates

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MET Treated Water Rate

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1600

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2000

1955 1965 1975 1985 1995 2005 2015 2025 2035 2045

Historical Rate = 5%/yr

Long-Term Projection = 2.5%/yr

Historical Projection

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Project Unit Costs vs MET Rate

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200

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2010 2015 2020 2025 2030 2035 2040 2045

$/A

F

Project Unit Cost $/AF

MET Rate

$718 (T1+Cap+RTS)

$1287 -250$1037

Note: Unit cost is for a $136 M 15 mgd facility. Assumes MET $250/af subsidy. Assumes long-term inflation at 2.5% on all

O&M except energy which is based on long-term estimates

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Project Unit Costs vs MET Rate

0

200

400

600

800

1000

1200

1400

1600

1800

2010 2015 2020 2025 2030 2035 2040 2045

$/A

F

Project Unit Cost $/AF

MET Rate

Reliability Premium$718 (T1+Cap+RTS)

$1287 -250$1037

Note: Unit cost is for a $136 M 15 mgd facility. Assumes MET $250/af subsidy. Assumes long-term inflation at 2.5% on all O&M except energy which is based on long-term estimates

$319 per AF

= $56 M (present value)

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Project Unit Costs vs MET Rates

0

200

400

600

800

1000

1200

1400

1600

1800

2010 2015 2020 2025 2030 2035 2040 2045

$/A

F

Project Unit Cost $/AF

MET Rate +/- 0.5%

2%

2.5%

3%

$718 (T1+Cap+RTS)

$1287 -250$1037

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Ocean Desal Costs

Technology advancements will lower desalination capital and O&M costs Membrane and energy recovery technology

More efficient and fouling resistant membranes are in R&D and commercialization (e.g. UCLA, others)

Improvements expected in pumping/energy recovery Advanced design solutions

Larger diameter vessels will reduce RO membrane system and facility capital costs

Other

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Energy Use Metrics

Comparative Energy Requirements Desal + Distribution 3800 kwhr/af Imported water to SOC 3240 kwhr/af SWP GW-Ag Transfers 3840 kwhr/af

Comparative Energy Use MetricsDesal per capita 1.5 kwhr/dayPersonal Computer (4hrs) 1.1 kwhr/dayRefrigerator 8.0 kwhr/day

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Dana Point Ocean Desalination Project Energy Use by Unit Process

0

1000

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3000

4000

kW-H

r/AF

Current Technology

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Comparative Energy Requirements for SWP, Water Transfers, & Ocean

Desalination at Project Site

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500

1000

1500

2000

2500

3000

3500

4000

SWP CV Ag Transfer Desal

KW

HR

/AF

kw-h

r p

er A

F

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Green Energy for Desal

Solar requires 2.3 acres and $8 to $10M investment to develop 1 megawatt of power for 6 hours per day

SDG&E is working on attaining 20% renewable energy portfolio by 2012 Peak System Demand is 4290 MW in 2015 Dana Point Desal Project is 8 MW = 0.2%

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Dana Point Ocean Desalination Project A Multiple Purpose Project

New south of Delta dependable water supply Cost is fairly expensive Protection from outage of regional system

Benefits equivalent to a supply rate of 23 cfs or a storage volume of 1425 AF (31 day outage)

Water quality benefit for recycling opportunities Provides ocean water intrusion barrier for the San Juan

Groundwater Basin Especially helpful during extended droughts

Environmentally acceptable project

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Agencies involved to date: Federal Agencies

o U.S. Bureau of Reclamationo U.S. EPAo U.S. Fish and Wildlife Serviceo U.S. Army Corps of Engineers

State Agencieso California Department of Water Resourceso California Department of Parks and Recreation o California Coastal Commissiono California State Lands Commissiono California Department of Fish and Gameo SWRCB and San Diego Regional Water Quality Control Board

Local and Regional Agencieso South Coast Water Districto Laguna Beach County Water Districto City of San Clementeo Moulton Niguel Water Districto City of Dana Point o South Orange County Wastewater Authorityo San Juan Basin Authorityo County of Orangeo Metropolitan Water District of Southern California

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Next Steps Outreach, Briefings and Formation of Joint

Powers Agency (JPA) Extended Pumping Test and Pilot Plant Process

Study Cost: $3.6 to $4.2 Million Duration: 3½ years Schedule: June 2007 through Dec 2010 Accept DWR grant of $1.5 M Seek Federal and Other funding JPA funding to initiate CEQA and Permitting

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Cost for Next Steps

Local agency costs for extended pump test and pilot plant construction and operation estimated between $100,000 to $350,000 per year per agency over next 3 years (depends on outside funding and number of agencies)

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Project TimelineSouth OC Water Reliability Study 2001-04

Pre-Feasibility Study 2002-03

Hydrogeology Investigation 2004-05

Test Slant Well/System Modeling 2005-06

Engineering Feasibility Report 2006-07

Formation of Joint Powers Agency 2007-08

Agreements/Pilot Plant and Testing 2007-10

Project CEQA/NEPA, Permits 2008-12

Design/Build/Operate contract on-line 2012-15

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Project Funding and Grants

Goal is to get the local cost of the desal water close to the cost of MET water

Work to obtain greater MET participation Support efforts for tax credit bonds

New Water Supply Coalition MET Board action to sponsorship Federal

legislation Work to procure Federal and State grants